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Has the Growth of Real GDP in the UK Been Overstated Because of Mismeasurement of Banking Output?


  • Nicholas Oulton


If official figures overstated the growth of banking output in the UK in the recent boom, does this mean that GDP growth was overstated too? The answer is no. It is truer to say that if banking output was overstated then the output of some other industry or industries must have been understated, leaving GDP relatively unaffected. The reason is that the Office for National Statistics measures the real growth of GDP primarily from the expenditure side. And from the expenditure side most of the problematic part of banking output drops out since it constitutes intermediate consumption not final expenditure. Consequently, the effect of any mismeasurement of banking output on GDP growth in the boom of 2000–7 is likely to have been small; GDP growth might have been overstated by about 0.1 per cent per annum.

Suggested Citation

  • Nicholas Oulton, 2013. "Has the Growth of Real GDP in the UK Been Overstated Because of Mismeasurement of Banking Output?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 224(1), pages 59-65, May.
  • Handle: RePEc:sae:niesru:v:224:y:2013:i:1:p:r59-r65

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    References listed on IDEAS

    1. Carol Corrado & Charles Hulten & Daniel Sichel, 2005. "Measuring Capital and Technology: An Expanded Framework," NBER Chapters,in: Measuring Capital in the New Economy, pages 11-46 National Bureau of Economic Research, Inc.
    2. John G. Fernald, 2015. "Productivity and Potential Output before, during, and after the Great Recession," NBER Macroeconomics Annual, University of Chicago Press, vol. 29(1), pages 1-51.
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    Cited by:

    1. Oulton, Nicholas, 2013. "Medium and long run prospects for UK growth in the aftermathof the financial crisis," LSE Research Online Documents on Economics 58239, London School of Economics and Political Science, LSE Library.

    More about this item


    GDP; national income accounting; banking; financial services; mismeasurement;

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages


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