A glossary of key elements used in the economic accounts is presented below. Further information on National Accounts concepts can be found in “A Short Guide to the UK National Accounts” paper published by the ONS.

  • Basic prices are the preferred method of valuing gross value added and output. They reflect the amount received by the producer for a unit of goods or services minus any taxes payable plus any subsidy receivable on that unit as a consequence of production or sale (that is the cost of production including subsidies). As a result the only taxes included in the basic price are taxes on the production process – such as business rates and any vehicle excise duty paid by businesses – which are not specifically levied on the production of a unit of output. Basic prices exclude any transport charges invoiced separately by the producer.
  • Compensation of employees (COE) is the sum of all employment income, including wages and salaries, employers’ pension and National Insurance contributions, bonuses and benefits in kind.
  • Distributors’ Trading Margins (DTM) a Transportation, storage and distribution do not change the physical appearance or nature of goods but change their time or place. The value added by the distributive industries is calculated as the difference in value of the good when it started and when it finished being held or moved i.e. the actual receipts from sales less the purchase of goods for resale less recurrent losses due to wastage, theft, etc plus net change in distributors' inventories. 

This forms part of the extra costs associated with the valuation of a product leaving ‘the factory gate’ to the point where the product is purchased either for final consumption or intermediate consumption. These margins are typically earned by motor trades, wholesale, retail and catering industries and represent, for example, the difference between the price paid by the wholesaler for the good and the price paid by the purchaser. The distributors’ trading margins column sums to zero because it simply reallocates the supply of distribution services to the products being distributed. Because of the difficulties inherent in measuring trade and transport margins separately, these are shown as a single item.

  • Exports are goods and services produced in NI purchased by units in the rest of the world (including external sales to GB); conversely imports are goods and services produced in the rest of the world and purchased by NI residents. These do not include financial flows which form part of the balance of payments. The total of exports minus imports is known as the balance of trade.
  • Government final consumption expenditure Includes expenditure from both local authorities and central government. This covers pay of employees, procurement of goods and services and capital consumption.
  • Gross capital formation (which can be thought of as investment) is made up of three parts.
    1. The first (and largest) is gross fixed capital formation (GFCF), which relates to the purchase (and disposal) of fixed assets. Fixed assets are items which contribute to a productive process for more than a year and are not used up in the process of production. Examples of such assets are buildings (including dwellings), vehicles, plant and machinery, computer systems and aircraft.
    2. The second component is changes in inventories, which is made up of materials and fuel, work in progress and unsold finished goods.
    3. The third component is acquisitions less disposals of valuables. Valuables are defined as goods which do not contribute to a process of production but are a store of value for the owners. These include jewellery, precious metals, works of art and antiques.
  • Gross operating surplus is officially defined as the balance between GVA and labour costs paid by producers. In effect, it is equal to the sum of gross trading profits and income earned through the ownership of buildings (rental income).
  • Household final consumption expenditure comprises all the goods and services purchased and consumed by households. This will include food, alcohol, clothing, cars, rental on houses and holidays, to name but a few items. It does not include the purchase of houses or payment of interest on loans, which are expenditure on assets and property income respectively, and not consumption expenditure.
  • Intermediate consumption is defined as all goods and services used up or transformed in a process of production. This includes raw materials, power and fuel, rental on buildings and business services such as advertising, recruitment consultancy and cleaning. It specifically excludes staff costs and capital investment which are handled elsewhere in the accounts.
  • Mixed income is the income from self-employment. It recognises that the income of the self-employed is a combination of wages (COE) and profits (GOS), but it is not realistic or appropriate to split it into these two components
  • NPISH Final Consumption Expenditure is all consumption by institutions which provide goods and services; either free or below the market price.
  • Purchasers’ prices are the prices paid by purchasers. They include transport costs, trade margins and taxes (unless the taxes are deductible by the purchaser from their own tax liabilities).

Additional Reading

Other useful sources of information relating to National Accounts and the Supply-Use framework include: