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New Estimates of Regional GDP in the UK

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  • Julian Gough

Abstract

Real GDP is estimated by applying a price-level estimate or deflator to nominal GDP, but GDP levels in the UK’s 12 inhabited regions are only reported at nominal prices with no allowance for differences in regional prices. A purchasing power parity (PPP) rate for the £ in each region, measuring how much a typical bundle of goods and services would cost, is required to create an accurate index to apply to nominal GDP in order to get real regional values. A solution lies in creating an expenditure-based, weighted, regional price index for consumers’ expenditure, government spending, investment and exports, to adjust nominal data to real price levels. Using imperfect public data, creating an expenditure-based index makes a significant difference to the size of each regional economy and to GDP per capita. In real terms, the London economy shrinks by 12%, the South-East contracts by 2% and all other regions increase in size.

Suggested Citation

  • Julian Gough, 2017. "New Estimates of Regional GDP in the UK," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 18(2), pages 1-20, April.
    • Handle: RePEc:wej:wldecn:664
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    File URL: https://www.worldeconomics.com/Journal/Papers/Article.details?ID=664
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