The Office for National Statistics (ONS) has released the latest estimates and analysis of economic progress in the UK, incorporating a broader range of economic activities and assets than gross domestic product (GDP) does. The concept of inclusive income aims to capture unpaid household services, ecosystem services, and more, providing a more comprehensive understanding of economic growth and welfare.
Between 2005 and 2019, gross inclusive income (GII) in the UK grew by 20.5% in volume terms, with a growth rate of 1.2% in 2019 alone. However, GII experienced slower growth compared to GDP, which grew by 22.1% during the same period. The primary factor contributing to this difference was the weaker contributions from unpaid household work.
Net inclusive income (NII), which accounts for capital consumption and depreciation, grew by 17.5% in volume terms between 2005 and 2019, with a growth rate of 1.9% in 2019. Similar to GII, NII also grew at a slower pace compared to net national disposable income (NNDI), which grew by 20.1%. Again, this can be attributed to the weaker contributions from unpaid household work, indicating that measures of welfare derived from GDP and other components have grown at a slower rate than the overall economy.
The estimates presented in this release are part of the ONS’s “Beyond GDP” program, which aims to provide a more comprehensive and inclusive measure of economic progress. By including a broader range of activities and assets, such as unpaid household services and carbon sequestration, these measures offer a more holistic view of economic activity and its impact on well-being.
However, it is important to note that these estimates are still considered experimental and a work-in-progress. The framework is being continuously developed, with further research needed, particularly in incorporating human capital into the measurements.
The ONS’s inclusive income research aligns with the Dasgupta Review’s (2021) approach to evaluating economic progress based on a country’s inclusive capital stock, encompassing produced capital, human capital, and natural capital. The ONS has already begun measuring the UK’s inclusive capital stock, and the inclusive income estimates aim to align with this broader perspective of economic activity.
These data provide valuable insights into the expanded range of economic activity beyond traditional measures like GDP. They also complement the ONS’s development of well-being dashboards, which integrate various types of data into single measures like GII and NII. By appropriately weighing these measures, trade-offs and complementariness between components can be revealed, helping policymakers and researchers understand the broader impact of economic growth on the environment and people’s well-being.
The inclusive income estimates reflect ongoing research and development, and user feedback is encouraged. The ONS is keen to receive input on whether the data should be presented with or without human capital and welcomes comments sent to Inclusive.Wealth@ons.gov.uk.
For more detailed information, including methodology and data sources, please refer to the official release by the Office for National Statistics.