Economic Statistics In The Time of Brexit

By Rebecca Riley

 

Economic statistics are fundamental to informed economic and policy decision making. As the UK and the EU prepare for Brexit the need for the type of objective evidence that economic statistics can provide is all the more important. How dependent are different sectors and regions of the UK on existing trade arrangements and how might they be affected by new ones? How is uncertainty about the nature of the UK’s future relationship with the EU influencing business? And what are the economic and social consequences of EU and non-EU migration? These are but some of the difficult questions that decision makers need to grapple with. Today at a Special Session at the annual conference of the Royal Economic Society, the Economic Statistics Centre of Excellence (ESCoE) and the UK Office for National Statistics (ONS) brought together academics, national statisticians and policy makers to discuss the evidence required.

The first paper discussed early results from a new business survey, the Management and Expectations Survey (MES), carried out by ESCoE researchers in collaboration with the ONS. The survey of 25,000 UK businesses last year asked about their business, their operations, and what they thought their performance and the UK economy’s performance would look like in the near future. Led by Nick Bloom (Stanford University), a team of academics and ONS economists, including Gaganan Awano, Ted Dolby and Jenny Vyas from ONS, have been working to produce results from the survey. Amongst other things the survey shows that while many UK businesses adopt good management practices, a long tail do not. Those that do not are typically less productive. Presenting the results, Tatsuro Senga (Queen Mary University of London) suggested that UK businesses had very wide-ranging views about the likely path the economy would take this year, reflecting uncertainty about the economic outlook. He also said that UK businesses were typically more pessimistic about the economic outlook for this year than independent forecasters. With further analysis and linking to other data this new survey could provide better understanding of the UK’s productivity woes.

Next Marcel Timmer (University of Groningen) discussed how assessments of the extent to which the UK economy depends on international trade must reflect that the UK is part of a network of Global Value Chains. This means that exports by an industry require economic activity in many other domestic industries, as well as industries abroad. So, he suggests gross export values provide limited information on the trade dependence of UK industries. Building upon a new set of indicators that take into account the role of international production fragmentation, he estimates the amount of UK GDP that depends on exports to different EU countries, the US and China. Related research shows that most of the value-added and therefore most of the jobs  associated with UK exports are generated in services industries, rather than in manufacturing. This is because of the increasing importance of direct services exports, as well as the role of services as inputs for manufactured exports. Commenting on the presentation Giordano Mion (University of Sussex) highlighted the need for National Statistics Institutes across the world to develop accurate data on the production links between the different industry sectors of the economy and between countries.

In a third presentation Jonathan Wadsworth (Royal Holloway University of London, and former member of the UK Home Office’s Migration Advisory Committee) asked whether immigration might affect the rate of mobility from “low” to “high” skilled sectors of native born workers where there is a supply of ready-trained “high-skilled” migrants. His research suggests that training and hiring rates of UK-born younger workers appear to have fallen most in activities with the largest increases in the share of ready-trained immigrant workers, like nursing and IT professionals. He highlighted the importance of measuring immigration accurately to enable robust conclusions to be drawn and encouraged further dialogue between academics and national statisticians around how immigrants are sampled in the major UK household surveys. In further discussion Jonathan Portes (King’s College London) and Iain Bell (Deputy National Statistician and Director General for Population and Public Policy at ONS) discussed the complexities of measuring migration and the work that is being undertaken at ESCoE and ONS to further develop measures of migration.

Rebecca Riley, ESCoENIESR

Monday, March 26, 2018

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