Office for National Statistics written evidence to the International Trade Committee’s inquiry on the coronavirus pandemic and international trade

Dear Chair,

I write in response to the International Trade Committee’s call for evidence for its inquiry on the coronavirus (COVID-19) pandemic and international trade.

As the Committee will be aware, the Office for National Statistics (ONS) is the UK’s National Statistical Institute, and largest producer of official statistics. We aim to provide a firm evidence base
for sound decisions and develop the role of official statistics in democratic debate.

We have focused our evidence on the new analysis we are doing to illustrate the impact of the pandemic on international trade, and how we are ensuring continuity of the data more broadly.

Continuity of the data

The ONS have prioritised assessment of data supplies to give early signal of potential data gaps and, or reduction in data quality. For Trade in Goods (TiG), the ONS works closely with HMRC colleagues to receive monthly data deliveries, including separate files for EU and non-EU data. The EU data is the imports and exports between the UK and each member state and is collected via a monthly survey called Intrastat. We are reassured that, as an online survey collection platform, HMRC can maintain business survey engagement and high response rates. Non-EU data are taken from the customs declarations which are timelier and have been used in the delivery of real time indictors (non-EU weekly packs) captured in the next section.

For Trade in Services (TiS) the challenges have been more immediate. Data from the International Trade in Services (ITIS) survey is the largest TiS data source, contributing around 50% of inputs into TiS. To date, ITIS data collection has not been moved online meaning the majority of businesses provide data via the paper survey. Our experience more generally is that businesses are  finding it harder to respond to paper forms during the coronavirus pandemic, perhaps as staff working from home have limited access to post. Our mitigation strategy to account for anticipated fall in response rates has been to ensure the techniques for dealing with missing data, known as imputation, remain robust; specifically, whether the existing methodologies cope with lower
response and produce meaningful estimates that can be used to produce TiS estimates.

One approach to developing imputation models is to identify relationships between ITIS data and other economic data. Our research shows that there is a strong predictive relationship between  the Index of Services (IoS) and Index of Production (IoP) turnover data, which are the two largest data sources that contribute to early estimates of GDP, and ITIS data. As such, models have been developed to estimate ITIS data based on wider movement in the economy. These estimates will be used alongside actual ITIS survey data, external indicators, and feedback from firms themselves to supplement and quality assure the survey data if needed. We will continue to review and refine this model, if required.

Alongside these steps, work is also underway to set up an online mode for the ITIS survey, which will enable companies to be sent spreadsheet-based surveys to complete and email back to us.

Planning is for this system to be set up in time for the quarter 2 2020 data collection cycle which begins in July 2020.

Data from the International Passenger Survey (IPS) makes up over 20% of TiS. With the IPS suspended, finding a new data source or statistical model has been high priority. Our investigations have concluded that alternative data sources for the IPS do not have the granularity and breadth of data that IPS have. For example, no data source looks at total travel expenditure so a number of sources will be required to provide a good working model. There is also a limited number of potential data sources, which poses a challenge to provide the variety of data that IPS is currently used for. This is a priority area for research.

New analysis to shed light on trade during the pandemic

In the short term, the priority for the ONS has been to ensure high quality trade data are available, while addressing the challenges set out above. To ensure transparency, additional briefing has been added to our statistical outputs to notify data source changes and to quantify their impact. Examples of additional communication can be found in the UK Trade February 2020 publication.

Our trade data publication is comprehensive, covering 234 countries and 125 categories of goods and services. This allows users to tailor their analysis to their own needs.

We are also aware that there has been significant demand for more timely information on how businesses are responding to the challenges of the pandemic. To further shed light on trade impacts, a series of trade related questions are included in the faster indicators weekly release.

The business indicators are based on responses from the voluntary, fortnightly Business Impact of Coronavirus (COVID-19) Survey (BICS), which captures business’ views on impact on turnover, workforce prices, trade, and business resilience. The survey questions are available in Business Impact of Coronavirus (COVID-19) Survey questions: 4 May to 17 May 2020.

Business Impact of Coronavirus (COVID-19) Survey (BICS)

The BICS was established early on following the coronavirus restrictions and is sent out to a large sample of UK businesses each fortnight. We call each return period a wave, with wave 6 being the latest, running from 18 to 31 May. We have changed a number of the questions on the survey over that time, to reflect the changing situation and also the policy issues of the day. This online survey provides a timely and useful snapshot of the impact of COVID-19 on business conditions and sentiment; we anticipate continuing with the survey, and refining it, for some time. The survey asked respondent questions on the financial performance of their businesses and on the challenges faced in the weeks prior, among other things. The importing and exporting questions in the BICS are designed to capture economic-based information only from businesses who are trading and whose financial performance is outside of normal expectations.

The latest BICs data shows that, of businesses who exported goods or services in the past 12 months and whose financial performance was outside of normal expectations, 78% reported exporting during the coronavirus (COVID-19) pandemic. Of businesses who imported goods or services in the past 12 months and whose financial performance was outside of normal expectations, 79%  reported importing during the coronavirus pandemic. Additionally, almost three-quarters (72%) of exporters during the coronavirus pandemic reported that they are exporting less than normal, compared with almost two-thirds (60%) of importers.

Figure 1: Businesses exporting/importing goods or services during the coronavirus outbreak, who were continuing to trade, and those whose financial performance was outside
of normal expectations, UK, 20 April to 3 May 2020

Office for National Statistics written evidence to the International Trade Committee’s inquiry on the coronavirus pandemic and international trade

(Final results, Wave 4 of ONS BICS (Exports: n = 898) (Imports: n = 1,174). Bars may not sum to 100% because of rounding)
Source: Office for National Statistics – Coronavirus and the economic impacts on the UK

Alongside the weekly wider BICS publication, the ONS also published a complimentary analysis of the final results from Wave 4 of the BICS for the period 20 April to 3 May 2020, specifically on the impact of coronavirus on exporting and importing in UK businesses.

This illustrated that the transportation and storage industries had the highest percentage of businesses reporting that they are exporting and importing less than normal, at 81% and 80% respectively, followed by the wholesale and retail trade industry at 80% and 65% respectively.

Figure 2 show a breakdown by industry, of the effect on exporting and importing on businesses continuing to trade, whose financial performance was outside of normal expectations.

Figure 2. Effect on imported and exporting, businesses continuing to trade, whose financial performance was outside normal expectations, traded during COVID-19, reporting effects of
COVID-19 on trade, broken down by industry.
Office for National Statistics written evidence to the International Trade Committee’s inquiry on the coronavirus pandemic and international trade
(Final results, Wave 4 of the ONS Business Impact of Coronavirus (COVID-19) Survey (BICS). UK businesses responding to the Business Impact of Coronavirus (COVID-19) Survey (BICS) who were continuing to trade domestically and internationally and whose financial performance was outside normal expectations (n=898 exp, n=1,174 imp). Results are removed where percentage less than 1% or industry count less than 10.)
Source: Office for National Statistics, Impact of coronavirus on exporting and importing

The BICS also surveyed respondents’ expectations for exporting and importing over the next two weeks. Of responding businesses who were continuing to trade and whose financial performance
was outside normal expectations, an identical portion (64%) reported that they expect exporting and importing to be the same over the next two weeks. Figure 3 shows that the majority of businesses expect importing and exporting to remain the same over the next two weeks.

Figure 3. Percentage of businesses continuing to trade, whose financial performance was outside normal expectations, traded during COVID-19, reporting expectations of trading in
the next 2 weeks, broken down by industry, UK, 20 April to 3 May 2020.
Office for National Statistics written evidence to the International Trade Committee’s inquiry on the coronavirus pandemic and international trade
Source: Office for National Statistics, Impact of coronavirus on exporting and importing Upcoming data

Our latest wider trade release covers trade for Quarter 1 (January to March) 2020, during which the UK9 and many of its major trading partners introduced measures to combat COVID-19. We will beable to start assessing the full effect on trade in services from quarter 2 of 2020 when data starts becoming available at the end of July 2020.

I hope this evidence is helpful to the Committee. Please do not hesitate to contact me if I can be of any further assistance.

Yours sincerely,
Jonathan Athow

Office for Statistics Regulation written evidence to the International Trade Committee’s inquiry on UK investment policy

Dear Mr MacNeil,

I write regarding the International Trade Committee’s report on UK Investment Policy released on 30 July 2019. I noted within this report that the Committee has recommended the Office for National Statistics (ONS) and the Department for International Trade (DIT) provide better Foreign Direct Investment (FDI) data.

The Office for Statistics Regulation (OSR) provides independent regulation of all statistics produced by the UK Government, Devolved Nations and by all related public bodies. The OSR is the independent regulatory arm of the UK Statistics Authority, which was established by the Statistics and Registration Service Act 2007 (the SRSA).

The OSR sets the standards producers of official statistics must meet through the statutory Code of Practice for Statistics. We assess compliance with this Code, and where the Code is met in full, the Authority designates the statistics as ‘National Statistics’. We also report publicly on systemwide issues, and on the way in which people are using statistics, celebrating when people uphold the standards and challenging publicly when they are not. There are three foundational pillars of the Code, referred to as TQV:

• Trustworthiness: trusted people, systems and processes.
• Quality: robust data, method and statistics.
• Value: statistics that serve the public good.

Given our independence, I thought that the Committee might benefit from hearing from OSR regarding our work to improve FDI official statistics, as well as the coherence between ONS and DIT investment statistics.

Last year, we conducted a check of compliance with the Code of Practice for Statistics of the ONS’s FDI statistics. The range of data and statistics on FDI and Inward Investment is complex. Given the different metrics and the complexity, OSR is very supportive of the joint work that the ONS and DIT are conducting to shed more light onto the latest developments at a granular level in respect to FDI, and expressed this view in our letter to Jonathan Athow on 18 December 2018. We see the results of such collaboration as going much further to answer users’ queries. We commend DIT for publishing its Inward Investment as Official Statistics for the first time in 2017, with the ongoing obligation to meet quality standards and users’ needs.

The Code of Practice for Statistics expects ministerial and press statements to meet basic professional standards of statistical presentation, including accuracy, clarity and impartiality. We suggested to DIT that the communications professionals responsible for press releases might benefit from ongoing advice from their Head of Profession for Statistics on what the Code of Practice for Statistics expects regarding statements drawing on statistical releases.

DIT ministers and communications professionals should always take the advice of professional statisticians about the presentation of statistics*. Both DIT and ONS statisticians are working with their respective communications teams on the contents of ministerial and press statements. DIT and ONS communications teams have sensible sign off processes for ministerial and press statements. We are also aware that ONS’s senior statistician responsible for FDI is taking up a position in DIT responsible for enhancing its Inward Investment statistics, which will assist greatly in collaboration between the two FDI statistics producers. We support the work of the Government Communications Service’s leadership to improve trust in public statements and recommend that DIT works with this initiative.

As part of our ongoing monitoring of official and National Statistics we intend to actively monitor the joint work that the ONS and DIT are conducting, and the implementation of the plans of both
departments to transform FDI statistics by providing robust FDI data at a granular level. We intend to publish our view of the progress with these plans next year.

If you and the Committee would find further discussion useful, I would be happy to meet.

Yours sincerely,
Ed Humpherson
Director General for Regulation

 

*The Code of Practice for Statistics under the Trustworthiness pillar, principle 8 Orderly Release, practice 8 states that press statements referring to regular or ad hoc official statistics should meet basic professional standards of statistical presentation, including accuracy, clarity and impartiality. The lead statistician or analyst should advise on the appropriate use of the statistics within these statements.

 

Related Links:

Office for National Statistics oral evidence to the International Trade Committee as part of their inquiry into UK investment policy. (January 2019)
Office for National Statistics written evidence to the International Trade Committee as part of their inquiry into UK investment policy. (September 2019)

Office for National Statistics written evidence to the International Trade Committee’s inquiry on UK investment policy

Dear Mr MacNeil,

I write to offer the Office for National Statistics (ONS) response to the International Trade Committee report on ‘UK investment policy

I welcome this report and note its recommendations which will guide our Foreign Direct Investment (FDI) statistics work programme over the coming years.

The Committee made two recommendations relevant to the ONS. Firstly:

“The Office for National Statistics publishes data on the capital value of inward Foreign Direct Investment—but it does not separate out greenfield investment from mergers and acquisitions, or from investment through Special Purpose Entities. We note the Office’s desire to generate better data in this regard, possibly by finding ways of reconciling its “top-down” figures (derived from the Balance of Payments) with the “bottom-up” data (relating to specific investment projects) that is gathered by the Department for International Trade. We recommend that the two departments report to us, by the end of this year, on what they are doing to develop such collaboration. We also recommend evaluation of the methodology employed by the US Bureau of Economic Analysis as a possible model for generating a reliable dataset on the capital value of the different categories of inward Foreign Direct Investment.” (Paragraph 45)

The ONS recognise the importance and demand for development in this area and, as with the ongoing transformation of UK trade statistics, continue to work closely with the Department for International Trade (DIT) on improving and providing more granular FDI statistics.

In April 2019 we initiated a comprehensive programme of development with the aim of addressing user needs for the future of investment statistics, including more detail on FDI flows by type and quarterly estimates by industry and country. This work is being taken forward in collaboration with DIT who have provided funding for 2019/20 and is anticipated to run for several years. The project will deliver FDI estimates separated by greenfield investment, brownfield investment and corporate restructuring. An overview of our progress and priorities were published in an article on the ONS website in July 2019, with our focus for the immediate phase being development of the systems that will act as enablers to continuous improvement of the FDI surveys and related outputs.

ONS is committed to working towards coherent statistics across the Government Statistical Service (GSS) and works closely with other departments to this end. DIT figures do not aim to estimate FDI for the UK, but rather capture investments projects (and associated employment) they have supported; therefore, the two sets of statistics will never be fully consistent. Nevertheless, through collaboration, we will utilise more DIT data to inform ONS FDI outputs and will incorporate this within the scope of our development.

We have contacted the US Bureau of Economic Analysis (BEA) and Bank of Japan – who produce statistics on FDI by type of investment – to understand how they compile these statistics and although there are legislative differences within their systems when compared to the UK, we will inform our development plans based upon the lessons they have learned.

“The Government regularly cites statistics on Foreign Direct Investment from various sources; in doing so, it needs to be careful not to risk giving the impression of cherrypicking figures so as to convey the most favourable impression possible. In the presentation of investment data, care must be taken always to give the full picture, with clear distinctions made between: stocks and flows of investment, greenfield investment, and mergers and acquisitions; and year-on-year changes and multi-year trends. We recommend that the Department for International Trade should consider
commissioning the Office for National Statistics, or some other appropriate body at arm’s length from the Government, to publish on a regular basis a comparison and synthesis of the various statistical data-sources on UK Foreign Direct Investment, to give the fullest possible picture of trends and developments.” (Paragraph 46)

Under the cross-government development of UK trade statistics, we have commissioned an interactive portal to make the range of trade data more accessible to users; part of this project also aims to educate users on the varying concepts, content, and compilation methods underpinning these disparate sources. Subject to future funding settlements, the longer-term vision for this project is to expand the portal to incorporate all GSS data.

However, the immediate and natural next step will be to include FDI, providing an avenue for users to understand what is available in regard to investment. The team have already begun making ONS FDI data available via the portal, although it is still in its testing phase.

ONS will also discuss this recommendation with the Office for Statistics Regulation (OSR) and DIT to assess the feasibility of producing a guide to FDI sources, and to consider which body should produce this. We will report back to the committee by the end of the year.

I will of course keep the Committee updated on the work detailed above.

Yours sincerely,

Grant Fitzner
Director, Macroeconomic Statistics and Analysis
Office for National Statistics

Related Links:

Office for National Statistics oral evidence to the International Trade Committee as part of their inquiry into UK investment policy. (January 2019)
Office for Statistics Regulation written evidence to the International Trade Committee as part of their inquiry into UK investment policy. (September 2019)

Office for National Statistics written evidence to the International Trade Committee on Trade in services

Dear Mr MacNeil,

Following my recent appearance before the Committee for your inquiry considering UK Trade in Services on 13 March, I understand members are seeking further detail on the UK’s trade in services by country and service type, the sample size and typical response rates for
the International Trade in Services (ITIS) survey and some additional details about the planned next steps to trade asymmetries analysis and reduction.

We are providing this information to assist your inquiry and would be very happy to provide further clarification and advice on any points of interest to yourself and the Committee, as required.

Yours sincerely,
Jonathan Athow
Deputy National Statistician and Director General, Economic Statistics Office for National Statistics

 

 

 

Related Links:

Office for National Statistics written evidence to the International Trade Committee as part of their inquiry: Trade in services (March 2019)

Office for National Statistics oral evidence to the International Trade Committee’s inquiry on trade in services

On Wednesday 13 March 2019 Jonathan Athow, Deputy  National Statistician gave oral evidence to the International Trade Committee as part of their inquiry: Trade in services.

A transcript of which has been published on the UK Parliament’s website.

Related Links:

Office for National Statistics written evidence to the International Trade Committee as part of their inquiry: Trade in services (April 2019)

Office for National Statistics oral evidence to the International Trade Committee’s inquiry on UK investment policy

On Wednesday 23 January 2019 Jonathan Athow, Deputy National Statistician for Economic Statistics gave oral evidence to the International Trade Committee as part of their inquiry into UK investment policy.

A transcript of which has been published on the UK Parliament’s website.

Related Links:

Office for National Statistics written evidence to the International Trade Committee as part of their inquiry into UK investment policy. (September 2019)
Office for Statistics Regulation written evidence to the International Trade Committee as part of their inquiry into UK investment policy. (September 2019)