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Economic statistics classifications

The UK national accounts are produced under internationally agreed guidance and rules set out principally in the European system of accounts 2010 (ESA10), and the accompanying “Manual on government deficit and debt” (MGDD).

ESA10 is an article of European Union (EU) law; these rules apply to all countries in the EU, and the UK is legally required to produce the national accounts on an ESA10 basis. In the UK, the Office for National Statistics (ONS) is responsible for the application and interpretation of these rules.

The government has chosen to base its departmental budgeting rules and fiscal statistics on national accounts principles. Consequently ONS decisions on how organisations and the transactions they engage in are treated in the national accounts underpin both the outturn figures in the joint HM Treasury (HMT)-ONS public sector finances publications, and the forecast data published by the independent Office for Budget Responsibility (OBR), as well as informing the public sector boundary used in the production of Whole of Government Accounts (WGA).

Classification decisions also feed into a wide range of ONS economic statistics – the national accounts themselves, public sector employment, etc.

Under ESA10, all institutional units operating within an economy are classified by ONS to one of 6 “institutional sectors”. The sectors are:

  • financial corporations

  • general government

  • households

  • non-financial corporations

  • non-profit institutions serving households

  • rest of the world

Some of these are also further disaggregated into various subsectors; for instance, “general government” consists of “central government” and “local government”.

The public sector includes all units within general government, as well as bodies classified as public non-financial corporations (e.g. Post Office Limited) or public financial corporations (such as the Bank of England or the Royal Bank of Scotland).

All transactions that take place between the different sectors of the economy are also classified. ONS makes classification decisions on whether payments to government are taxes or not (and what type of tax), and on how to record things like privatisations, fines, compensation payments, pension contributions, student loans and other benefits, as well as various other payments between sectors of the economy.

The ONS Economic Statistics Classification Committee (ESCC), a panel of experts in national accounting, is responsible for establishing the correct statistical treatment of all the units and transactions covered by the UK national accounts. To aid the ESCC in reaching its decisions, a small secretariat team gathers relevant information, collates the relevant guidance and presents the evidence for consideration.

In straightforward cases, a single member will agree the classification on behalf of the ESCC. Cases that are not straightforward are fully discussed by the ESCC, which establishes a recommendation that is approved by the Chair of the ESCC or, in particularly challenging or statistically significant cases, the Director of National Accounts and Economic Statistics. More information on how ONS reaches classification decisions can be found in the ONS classification process pages.

Economic statistics classification decisions can have a large impact on economic statistics, and so classification decisions are considered carefully and those with a significant impact are authorised at a senior level in the office.

The pages linked below detail information on major classification decisions taken in recent years, give documentation on the classification process and provide access to an up-to-date list of entities and their classification in the UK national accounts.

Content from the Office for National Statistics.
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