National Accounts changes: improvement to deflation of investment in software

26 Mar 2015 02:43 PM

ONS has yesterday published an article setting out details of improvements to the deflation of investment in software in the UK National Accounts, which will be implemented in the 2015 Blue Book.

Following consultation, the changes to be introduced will include an additional price index to deflate the pre-packaged component of software investment. As no other appropriate price index is currently available, the US Producer Price Index for pre-packaged software will be used for this component, adjusted for purchasing power parity.

The pre-packaged software market is globalised, so this gives a good representation of the UK position. The same practice has been adopted by some other comparable countries, such as Canada and Australia.

Indicative estimates suggest that the changes to the deflation of investment in software will lead to an upwards revision of 2.6 percentage points in the growth of Gross Fixed Capital Formation (GFCF) between 1997 and 2013, and an upward revision of 4.8 percentage points in the overall growth of business investment over the same period.

Other changes will also be made to the compilation of GFCF and business investment in Blue Book 2015, which will also have an impact on their levels and growth rates. These include: improvements to the estimation of major repairs to dwellings; the reclassification of Network Rail and Transport for London; improvements to the adjustments made to account for survey under-coverage; updated source data for the costs of transfer of non-produced assets; improvements to the estimation of tax credits, a component in the estimation of research and development; and annual updates to source data. These changes will be described in articles to be published later in 2015. 

Background notes

  1. The full deflation of investment in software article is available here: http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/articles/2011-present/changes-to-national-accounts-for-blue-book-2015.doc
  2. Details of the 2015 Blue Book can be found here: http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/changes-to-national-accounts/blue-book-and-pink-book-2015-changes/index.html
  3. Details of the policy governing the release of new data are available from the media office.

  4. National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference. 
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