Our audit of SPPIs concluded that it is unlikely that errors in measuring services prices are especially large in the UK compared with other countries, suggesting that this aspect of measurement is unlikely to explain the observed poor UK performance in productivity growth relative to other major economies in the past decade. The results did not, however, preclude that some services prices are badly measured everywhere, which might contribute to an explanation of the global productivity slowdown experienced by many countries. Our work highlighted large differences in prices for some services between business-to-business and business-to-consumer transactions. We suggest that efforts to improve measurement of prices in services should focus on understanding these differences.
Our work on education suggested that the use of standardised test scores may not capture key aspects of underlying skills that should be incorporated in quality adjustments, and points to the need to consider the education sector as a whole, rather than separating schools from further education. Our research also suggested that nominal and real output measures based on increments to lifetime earnings that can be attributed to formal education are a useful alternative method to current practice. Such measures could be incorporated into the national accounts in a consistent way by treating education as investment in social infrastructure, with education of foreign students allocated to exports.
We examined several alternatives to the way the Bank of England currently calculates the FISIM reference rate. We propose a method to potentially better capture MFIs’ cost of funding. We also suggest that adjusting FISIM estimates for loan defaults would probably be an improvement to the National Accounts.
