FILE PHOTO: Shoppers walk along Regent Street in London, Britain, July 9, 2024. REUTERS/Hollie Adams/File Photo
LONDON: The same kind of survey failures that have left the UK unsure about the number of people in Britain’s workforce are now raising doubts about the size of its economy. The Office for National Statistics (ONS) has seen a collapse in responses to a key household questionnaire that it relies on to produce growth estimates, prompting it to take remedial action.
The so-called living costs and food (LCF) survey, used in gross domestic product (GDP) readings such as those for the third quarter, helps the British statistics agency determine people’s incomes and what they’re spending their money on.
The latest data showed that barely one-fifth of the forms are being completed and returned, mirroring a shortfall in the ONS’s monthly jobs survey, which policymakers said no longer provides a reliable snapshot of the country’s labour market.
In the case of the growth report, the drop-off means an increased risk of sudden and retrospective changes to gross domestic product (GDP) readings, potentially feeding bad decisions by political leaders and officials.
“There’s a bigger chance of revisions, and there’s a bigger chance of policy errors as a result because policy is made in real time,” said Greg Thwaites, research director at the Resolution Foundation.
“If there’s a problem with the survey and consumption data, that will have a small effect on the GDP estimate, not a huge one.”
The decline shows that the crisis of confidence that has rocked the ONS’s labour report could spread to other indicators used by the Bank of England, the Treasury and others.
In slow-growing Britain, small data revisions can make the difference in public perceptions about whether Prime Minister Keir Starmer is failing or succeeding in his promise to rebuild the economy.
Employment Minister Alison McGovern said that the government was already using alternative sources for jobs data. — Bloomberg
