ONS measuring reforms to send savings ratio and growth forecasts soaring
The Office for National Statistics are set to change the manner in which they measure and gauge economic performance so that it is in accordance with global accounting standards, in a move that will send the countryís saving ratio soaring straight away.
The new standards will mean that total public debt will rise, economic growth forecasts will soar and the savings ratio will instantly take an upward trajectory, with the ONS identifying that figures on GDP for 2012 and 2013 could yet be upgraded following the implementation of the new system.
The measuring reforms are the first of their kind in over 15 years, and will see the ONS adopt a similar approach to equivocal organisations in the US, Australia and Canada. One of the major changes that will be instigated from September this year is that research and development spending will no longer be regarded as a cost of production, and instead will contribute toward the overall value of GDP. Production and sale of military itinerary, such as weapons and aircraft carriers, will also begin to contribute towards rises and falls in GDP.
The ONS has estimated that the new measuring methodology could increase the latest GDP forecasts by between 2.5% and 5%, or a maximum rise of a monumental £75 billion.
Another major change announced by the ONS was that they would begin counting future pension rights in present income terms, in a move that is expected to increase estimated household wages and the overall savings ratio.
Initial forecasts have estimated that the ratio will rise by 100% to around 10%, which would bring it closer in line to the average displayed in a number of its European counterparts.
The news comes just weeks after Chancellor George Osborne unveiled his saver friendly budget, in which he identified his intention to instigate a series of measures in the future that would make it easier and more attractive for people to begin saving again.
Mr Osborne argued that with interest rates set to rise and wage rises still not oustripping inflation ,that the need to save is of paramount importance, and identified that his new policies will reflect this overarching aim.
He also announced that pensioners will have far more flexibility when trying to access their pension funds, as they will be able to take out large percentages of their assembled pot, without having to payout to acquire a poor value annuity.