A clear majority of economists polled by Reuters are concerned about the quality of official British economic data, the backbone of monetary and fiscal policy decisions, and have doubts over how quickly they can be fixed.
Facing criticism over unreliable economic data, Britain’s Office for National Statistics announced measures last week to address the issue, including splitting its leadership structure and investing 10 million pounds ($14 million) over the next two years.
But a Reuters poll published on Thursday showed reservations among analysts over how quickly the problems, primarily involving labour market data, can be fixed.
The Labour Force Survey has seen a plunge in response rates since the COVID-19 pandemic, casting doubts over its results.
The ONS also said last month that April consumer price inflation, which the Bank of England targets, was overstated by 0.1 percentage point.
The British agency isn’t alone. There are some concerns about the reliability of U.S. inflation data released by the Bureau of Labor Statistics as it faces a staffing crunch.
The BoE, like other central banks, needs to be sure about inflationary pressures from the jobs market to set its policy. Governor Andrew Bailey recently described the data shortcomings as a “substantial” problem for policymakers.
Inaccurate economic data also make it difficult for economists to produce forecasts, as historical data play a key role in that process.
Nearly 85% of economists, 21 of 25, in a June 25-July 3 Reuters poll said they were concerned about the quality of official UK economic statistics, including 40%, or 10, who said they were very concerned. Only four said they were unconcerned.
“Producing economic statistics is not an easy task, but the ONS has managed to let the quality slip of some fairly important statistics over the years,” said James Rossiter, head of global macro strategy at TD Securities, one of the gilt-edged market makers (GEMMs) – primary dealers in UK government bonds.
“The fact the agency was so slow to come to terms with the quality decline … makes the institution’s data less trustworthy than their peers in other developed economies.”
Rossiter said the big risk was that policymakers were left grappling with the true state of the economy against a volatile global backdrop.
Worries about economic data could also hurt investor confidence, which is already low over erratic U.S. trade policies and ongoing geopolitical conflicts.
Concerns have eased somewhat following the ONS’s pledge to “restore quality and confidence” in its data, but a turnaround will take time.
“There are clearly issues with UK labour market data which we are aware of and working with or around … There isn’t necessarily a quick fix here,” said Cathal Kennedy, senior UK economist at RBC Capital Markets, also a GEMM.
“The best way the ONS can rebuild confidence is to continue being transparent and open about the steps it is taking to improve its services. Some refocus on core/key areas is also likely to be beneficial.”
($1 = 0.7320 pounds)
(Reporting by Indradip Ghosh）
