Gross National Inventory
Reservations – Gross
Editor: Stuart Deneen
Office for National Statistics
1. Gross National Inventory Background
The European Statistical Commission regulation; harmonisation of gross national income (GNI) at
market prices, Council Regulation 1287/2003 of 15 July 2003, lays downs the definition and
calculation of GNI and the provisions for the forwarding of the data and additional information by
Member States to the Commission. In addition to the calculation of GNI the regulation also
provides the required procedures to enable the verification of comparability, exhaustiveness and
reliability of estimates of GNI between Member States. Article 1 of the GNI Regulation states that
GNI shall be defined in accordance with the European system of national and regional accounts
Each Member State returns an annual questionnaire including its GNI to the Commission. These
questionnaires are checked by Eurostat officials and are then formally presented for examination to
the GNI Committee, which is composed of representatives of the Member States and chaired by
GNI Regulation dictates that Member States also provide Eurostat with an up-to-date inventory of
the procedures and basic statistics used to calculate GNI and its components. These inventories
are one of the main instruments to enable Eurostat to assess the comparability, reliability and
exhaustiveness of the Member States’ GNI data. The inventories also include Process Tables
showing the results of all stages of the national accounts compilation process, from the statistical
sources to the published national accounts data.
In addition to the submission of GNI questionnaires the Commission also carries out information
visits to individual Member States. The aim of the visit is to collect additional information to assess
the quality of the statistical sources and/or methods used to calculate GNI and its components. In
preparation for an information visit, Eurostat transmits a list of questions for clarification to the
Member State concerned. The national statistical institute (NSI) is asked to answer the advance
questions preferably in written form prior to the mission.
At the end of this exercise, Eurostat provides an assessment on whether the Member States'
figures are appropriate or whether improvements are necessary. Based on the assessments by
Eurostat, the Commission notifies to the Permanent Representative of the Member State
concerned the required improvements in the form of reservations on the country's GNI data.
Eurostat drafts technical opinions on the countries' work on reservations. If a reservation has been
adequately addressed the Permanent Representative of the Member State concerned is informed
that the reservation is lifted.
2. Current Reservations
Currently the measurement of Gross Capital Formation in the UK national accounts has four
reservations outstanding. These reservations are on data used in both the Business Investment
and the Capital Stock statistical bulletins. The complete listing and brief explanation of the
reservations are at table 1 below.
Table 1 – Current GNI reservations
Serial Title Description
1 Minor repairs and maintenance of dwellings by owner- In the United Kingdom's national accounts all minor repairs and maintenance of
occupiers of a kind typically carried out by owners need to be dwellings are recorded as household final consumption expenditure. Expenditure on
separately identified and classified as intermediate minor repairs by owner-occupiers of a kind typically carried out by owners should be
consumption in the production of dwelling services separately identified and classified as intermediate consumption in the production of
dwelling services. Gross value added and gross operating surplus in dwelling services
(for households' imputed rents) should be adjusted accordingly.
The link to and consistency with the estimates of households' own-account major
repairs and improvements (to be recorded as gross fixed capital formation) should be
further investigated (applicable to years from 2002 to 2010).
2 The United Kingdom needs to include the creation of In the United Kingdom's national accounts the creation of cinematographic film
cinematographic film originals in the estimates of output and originals is not accounted for in the estimates of output and gross fixed capital
gross fixed capital formation formation.
The United Kingdom should develop sources and methods for the inclusion of the
creation of cinematographic film originals in the estimates of output and gross fixed
capital formation (applicable to years from 2002 to 2010).
3 Improvements need to be made in the estimation of In the United Kingdom's national accounts the major repairs of roads are not included
consumption of fixed capital on roads, bridges, etc. in gross fixed capital formation. The United Kingdom should treat the expenditure on
major maintenance and repair of roads as gross fixed capital
formation rather than as intermediate consumption. This change should be made for
the whole input time series for the Perpetual Inventory Model (PIM). The United
Kingdom is asked to use in the PIM calculations an average lifetime for roads that is in
accordance with the GNI Committee recommendations or to provide justification for
the longer lifetime (75 years) used in the calculations (applicable to years from 2002 to
4 A mark up for net operating surplus in own account software In the United Kingdom's national accounts the mark-up for net operating surplus is not
taken into account in the valuation of own-account software. Furthermore, it
remains not clear if the estimates of the consumption of fixed capital are included in
the output algorithm.
3. Current Progress
Gross Fixed Capital formation branch like many other National Accounts branches within the Office
for National Statistics is currently working to update sources and methodology which will enable us
to produce estimates consistent with the new ESA2010 requirements.
vision_of_ESA95 While priority has to been given to the implementation of these new ESA
changes good progress has been made on the outstanding reservations described above.
In particular collaborative work between the ONS, the Intellectual Property Office and Imperial
College, London led to the publication of an article entitled ’Updating the value of UK copyright
investment‘ in July 2012. See www.ipo.gov.uk/ipresearch-ukinvestment-201206.pdf It is
anticipated that these estimates will be fully integrated and available in the national accounts from
Blue Book 2013.
In addition to the work on cinematographic originals the ONS is beginning a project to redesign and
systematise the existing Perpetual Inventory Method (PIM) which is used to generate capital stock
estimates. A description of the existing PIM can be found here: http://www.ons.gov.uk/ons/rel/cap-
Progress updates on the resolution of the reservations will be reported periodically through the
relevant statistical bulletins.