ONS Economic Forum, 17 April 2023.pptx

Economic Forum
Chair – Grant Fitzner
@ONSfocus #ONSEconForum slido #39642
Chief Economist
Director, Macroeconomic and
Environment Statistics and Analysis
@GrantFitzner

Agenda
09:30am – 09:35am Welcome and introduction – Grant Fitzner, Chief Economist, Office for National
Statistics
09:35am – 09:50am State of the UK economy – Sam Beckett, Second Permanent Secretary, Office
for National Statistics
09:50am – 10:00am Energy intensity of Consumer Price Index (CPI) basket – Kathryn Keane, Office
for National Statistics
10:00am – 10:10am Changes in private rental sector behaviour, England, February 2022 to February
2023 – Aimee North, Office for National Statistics
10:10am – 10:25am Questions and answers
10:25am – 10:30am Closing remarks – Grant Fitzner, Chief Economist, Office for National Statistics

Questions can be submitted via the slido app using code #39642.
You can also access slido via the link in the chat box.

State of the Economy
April 2023
Sam Beckett
Second Permanent Secretary
Joint Head of the Government Economic Service,
Office for National Statistics

The economy has performed better than expected, but
the outlook remains challenging
Source: Office for Budget Responsibility Source: International Monetary Fund
98
99
100
101
102
103
2022Q4 2023Q2 2023Q4 2024Q2 2024Q4
2022Q4
=
100
Real GDP projections, 2023-24
November 2022 forecast
March 2023 forecast
-0.4
0
0.4
0.8
1.2
2023 2024 2023 2024
G7 UK
Per
cent
Real GDP projections, 2023-24
Oct-22 Apr-23

While GDP growth has been flat, there is variation
between sectors
-0.8
-0.6
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23
Per
cent
and
percentage
points
Contributions to change in monthly GDP,
February 2022 - February 2023
Construction
Production
Services
GDP
-50 -40 -30 -20 -10 0 10 20
Activities of households as employers, undifferentiated…
Other service activities (S)
Mining and Quarrying (B)
Human health and social work activities (Q)
Wholesale and retail: repair of motor vehicles and…
Transport and storage (H)
Real estate activites (L)
Electricity, gas, steam and air (D)
Manufacturing (C)
Education (P)
Agriculture, forestry and fishing (A)
Arts, entertainment and recreation (R)
Public administration and defence (O)
Financial and insurance activities (K)
Accommodation and food service activites (I)
Administrative and support service activities (N)
Construction (F)
Water supply, sewerage etc (E)
Professional, scientific and technical activities (M)
Information and communication (J)
Per cent
Cumulative change in industry level GVA,
February 2020 to February 2023
Source: Office for National Statistics Source: Office for National Statistics

The employment-to-population ratio remains near
historic highs, but investment remains subdued
Source: Office for National Statistics
-0.03 -0.025 -0.02 -0.015 -0.01 -0.005 0 0.005 0.01 0.015
Population share
Men 16-17 employment rate
Men 65+ employment rate
Men 16-17 activity rate
Men 65+ activity rate
Women 16-17 employment rate
Women 65+ employment rate
Women 16-17 activity rate
Women 65+ activity rate
Changes in EPOP ratio by gender and age,
Jan-Mar 2008 to Nov-Jan 2023
Pre-GFC to Pre-COVID-
19
Pre-COVID-19 to Latest
Pre-GFC to Latest
60
70
80
90
100
110
120
2010 Q1 2012 Q1 2014 Q1 2016 Q1 2018 Q1 2020 Q1 2022 Q1
2015
=
100
UK Business Investment, 2010 Q1 – 2022 Q4
Source: Office for National Statistics

Lower-than-expected borrowing provided space for
additional fiscal measures
-5
0
5
10
15
20
25
2022-23 2023-24 2024-25 2025-26 2026-27 2027-28
£
Billion
Effects of policy measures on borrowing,
FYE 2022 - FYE 2027
Indirect effects of
policy
Energy support
measures
Labour supply
package
100% capital
allowances
Other spending
decisions
Other tax decisions
Total policy effects
Source: OBR, ONS Source: Office for Budget Responsibility
0
20
40
60
80
100
120
140
160
2022
APR
2022
MAY
2022
JUN
2022
JUL
2022
AUG
2022
SEP
2022
OCT
2022
NOV
2022
DEC
2023
JAN
2023
FEB
£
Billion
Public Sector Net Borrowing: Outturn vs Forecast
Outturn
Novemeber OBR profile

Inflation continues to be broad-based
-2
0
2
4
6
8
10
12
Jan-02 Jul-04 Jan-07 Jul-09 Jan-12 Jul-14 Jan-17 Jul-19 Jan-22
Per
cent
Annual rate of CPI and core CPI inflation,
January 2002 – February 2023
Headline
15% trim
Excluding energy, food, alcoholic beverages and
tobacco
Source: Office for National Statistics Source: Office for National Statistics
0
200
400
600
800
1000
Jan-02 Jan-05 Jan-08 Jan-11 Jan-14 Jan-17 Jan-20 Jan-23
Weight
CPIH by weight, range of 12-month inflation rates,
January 2002 – February 2023
<0% 0% to 2% 2% to 4% >4%

The side effects of monetary policy have crystallised
recently
Source: Bank of England Source: International Monetary Fund
-20
-15
-10
-5
0
5
10
15
20
01/2018 09/2018 05/2019 01/2020 09/2020 05/2021 01/2022 09/2022
Per
cent
Annual change in loans to non-financial businesses
Non-financial
businesses
Large Businesses
0
5
10
15
20
25
30
35
40
UK Japan US Euro Area Other advanced
economies
Per
cent
Banks' security holdings, as a percentage of total
assets
Total securities Debt securities

Conclusions
• Independent forecasts point to a challenging year ahead but the
economy has performed better than expected in recent months
• Underlying inflation remains elevated
• Financial conditions have received more coverage in recent
weeks

Energy intensity of
Consumer Price Index
(CPI) basket
Kathryn Keane

Background
• Consumer price inflation has risen to 40-year highs in recent months, driven
largely by energy prices.
• Energy costs have both direct and indirect effects on consumer prices as
energy is a key input into almost all industries.
• Indirect energy intensity refers to the proportion of the consumer price for a
good or service that is driven by the energy used in its production.
• Consumer prices reflect a range of factors that also include labour and
capital costs, distribution, direct imports and taxes less subsidies.

Methods
• The Input-Output Tables (IOTs) provide estimates of the inputs into the
production of the goods and services available for use in the UK economy.
• We use these to estimate energy usage as a proportion of total expenditure
for each product.
• This shows us the indirect energy intensity of CPI by estimating the energy
intensity of each product we consume.

Energy intensity is below 3% for divisions that
don’t contain direct energy components
• Divisions that contain energy
components have the highest
indirect energy intensity
• All other divisions have energy
intensity between 0.3% and 2.7%
• Clothing and footwear has the
lowest energy intensity at 0.3%
0 5 10 15 20 25
Miscellaneous goods and services
Restaurants and hotels
Education
Recreation and culture
Communication
Transport
Health
Furniture and furnishings
Housing and household services
Clothing and footwear
Alcoholic beverages and tobacco
Food and non-alcoholic beverages
Per cent
Indirect energy intensity by division

Service components have more varied energy
intensity than goods
• Services classes have a wider range of
energy intensity than goods classes
• Services include very low energy intensity
(insurance, financial services) and very
high energy intensity (transport services)
• Non-energy goods with high energy
intensity include fruit and plants, those
with lower energy intensity include books
and newspapers
0
5
10
15
20
25
30
35
40
0-0.5
0.5-1
1-1.5
1.5-2
2-2.5
2.5-3
3-3.5
3.5-4
4-4.5
4.5-5
5-5.5
5.5-6
6-6.5
6.5-7
7-7.5
7.5-8
8-8.5
8.5-9
9-9.5
9.5-10
10+
Per
cent
Proportion of non-energy goods and services
classes by energy intensity
Goods excl energy Services

Higher energy intensity components have
contributed more strongly to rising inflation in
the last year
• We split the basket equally by weight and
allocate classes into categories by their
energy intensity
• High and very high energy intensity
products have been making the biggest
contributions to CPI growth since energy
costs increased
-2
0
2
4
6
8
10
12
Per
cent
Contributions to CPI inflation by energy
intensity, Jan 2019 to Feb 2023
Very low Low High Very high Energy Rents

Before the Russian invasion of Ukraine lower
energy intensity components contributed most
to inflation
• The difference in contributions between
higher (high and very high) and lower
(low and very low) energy intensity
products shows a clear trend since the
Russian invasion of Ukraine
• Until April 2022 lower energy intensity
products were contributing more to
inflation than higher ones -2
-1
-1
0
1
1
2
2
3
3
Per
cent
Difference in contributions to CPI between
higher and lower energy intensity

Key takeaways
• By estimating the energy intensity of CPI we can look beyond household
gas, electricity and fuel costs and see the wider impact of energy price
increases.
• More energy intensive goods and services have seen higher inflation over
the last year than less energy intensive components.
• These estimates may give some indication of where energy price pressures
are strongest but other factors such as labour costs are also key.

Head of Housing Market Indices
Prices Division
Changes in private
rental sector behaviour,
England: February 2022
to February 2023
Aimee North

Background
• ONS’ Index of Private Housing Rental Prices (IPHRP) has reported record
high UK annual rental price inflation for the past ten consecutive months.
• This analysis provides new insight into the changing behaviour observed in
the private rental sector.
• Estimates were obtained by comparing the rental price of each property
with its rental price when the same property was last visited.
• Median length of time between visits was 12 months.

Proportion of properties that have experienced
a price increase since last visit, by region
• London was the region with the
highest proportion of properties
revisited in February 2023 that had
experienced a price increase
(66.8%).
• The North West was the region with
the lowest proportion of properties
that had experienced a price
increase (27.9%).

Average rental price percentage increase, by
region
• In February 2023, London was the
region with the highest average price
increase (12.0%), up from 4.7% in
February 2022.
• The West Midlands saw the lowest
price increase (8.2%).
• England’s average price increase for
the same period was 9.7%, up from
6.7% in February 2022.

Size of rental price percentage change for
London properties, Feb-23 vs Feb-22
• The London average price
percentage increase has risen
compared with a year before.
• One third (33.3%) of London
properties revisited in February 2023
experienced a price increase of
more than 10%.
• This was up from 4.6% a year
before.

Proportion of revisited London properties that
experienced a price increase, by property type
• The proportion of London properties
revisited between December 2022
and February 2023 that saw a rental
price increase was highest for flats
and maisonettes (70.3%).
• Detached houses had the lowest
proportion experiencing a price
increase (37.5%).

Key findings
• Tenants in England are more likely to have faced recent rental price
increases compared with a year ago.
• The size of those price increases are likely to be larger now than a year
ago.
• Tenants in London are more likely to have experienced a price increase and
a larger price increase, compared with other regions.
• In London, tenants renting flats are more likely to have experienced a price
increase compared with other property types.

Questions can be submitted via the slido app using code #39642.
You can also access slido via the link in the chat box.
Q&A

Closing remarks
Grant Fitzner
Chief Economist
Director, Macroeconomic and
Environment Statistics and Analysis
@GrantFitzner

Forthcoming ONS economic analysis
17 April 2023 The Energy Intensity of the Consumer Prices Index: 2022
17 April 2023 Experimental gross UK Government research and development expenditure
estimates by ITL1 regions
24 April 2023 Tracking the impact of winter pressures in Great Britain
26 April 2023 Sickness absence in the UK labour market: 2022
3 May 2023 Insulation and Energy Efficiency of Housing in England and Wales 2022
4 May 2023 UK Environmental Taxes 2023
All information on upcoming analysis can be found via the ONS website

Dates for your diary
19 April 2023 ONS Business data and statistics user event
11 May 2023 Annual Crime and Justice Statistics Forum
15 May 2023 ONS Economic Forum – Registration to open shortly
Further details on the above event and any upcoming events will be published at
ons.gov.uk/economicevents

Dates for your diary
19 April 2023 ONS Economic Forum – Registration to open shortly
11 May 2023 Annual crime and justice statistics forum 2023
15 May 2023 ONS Economic Forum – Registration to open shortly
Further details on the above event and any upcoming events will be published at

Thank you for attending the
Economic Forum
You can keep up to date on all upcoming events via
If you would like to ask a question or provide any feedback, please do so
via economic.engagement@ons.gov.uk

ONS Economic Forum, 17 April 2023.pptx

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ONS Economic Forum, 17 April 2023.pptx