Did the GDP gap between NI and Britain’s wealthiest regions grow by almost 44% between 2000 and 2014?

• Ireland’s Future used inappropriate data to reach its conclusion
• By coincidence, analysis of official GDP data leads to results which are similar but not the same
• Regional GDP comparisons over time come with several health warnings

In its policy paper Shaping a New and United Ireland, campaign group Ireland’s Future claimed:

“[Between] 2000 and 2014 the gap between per capita GDP in N Ireland and the three wealthiest regions of GB increased by 44%.”

Data from the Office of National Statistics (ONS) can be examined in a handful of different ways to assess this claim. Each method leads to a different statistical figure, none of which are the same as the 44% figure identified by Ireland’s Future.

This is because the data used by Ireland’s Future is flawed.

Although the claim is about regional growth in different parts of the UK, and how the gap in GDP per capita between Northern Ireland and wealthier areas has grown, Ireland’s Future actually compared Northern Ireland’s growth to two regions from the UK and one from the Republic of Ireland (RoI).

This data is fundamentally unusable for the claim it was used to calculate.

Figures

The Office for National Statistics (ONS) publishes data tables with annual estimates of GDP for the UK as a whole and its regions.

Relevant data can be seen in the latest figures (Table 11, “chained volume measure”). The figures have been adjusted for inflation to reflect the current value of Sterling, which is important when comparing data between different time periods.

In 2000, the three UK regions with the highest GDP per capita were London, the South East, and the East of England. In 2014, those regions were London, the South East, and Scotland.

Figure 1 – GDP per capita in chained volume measure (all values in £)

Source: ONS

How can we use this data to assess the claim? A simple calculation does the trick: take the mean GDP per capita of the three relevant regions in 2000 then calculate how much larger this is than Northern Ireland’s figure, repeat this for 2014, then see how the 2000 gap and the 2014 gap compare.

Because Scotland had replaced the East of England in the top three regions for GDP per capita by 2014, there are three legitimate ways to approach this calculation – use the East of England for both years, Scotland for both, or East of England in 2000 and Scotland in 2014.

Figure 2 – calculations (all values in £)

None of these increases are 44%. Given that a lot of economics is based on calculations using estimates, and that these core estimates can be refined over time, it could be argued that these findings of between 42.3% and 51.7% are at least similar to the claim. 

However, there are several important layers of context that should be considered. Some relate to issues about comparing granular economic data over time, some simply relate to the usefulness of GDP per se.

And, ultimately, the reason that none of these calculations come to 44% is more basic.

Specific error

Ireland’s Future told us they based their calculation on data from a 2020 report from the Economics & Social Research Institute (ESRI), The political economy of a Northern Ireland border poll (the relevant figures are also available in table 1 here).

The problem is that the three regions Ireland’s Future are comparing with Northern Ireland are London, the South East of England, and the Southern and Eastern region of Ireland.

Remember, the claim clearly states that “between 2000 and 2014 the gap between per capita GDP in N Ireland and the three wealthiest regions of GB increased by 44%”.

The Southern and Eastern region of Ireland is not part of Great Britain.

This claim was made in a section of their report that is looking specifically at the UK’s internal economic policies and relative regional growth rates. It is clear from the context that regional growth figures from the Republic of Ireland are not relevant to the point being made. Use of this data is therefore inappropriate.

The fact that making the same calculations using relevant regions of GB, rather than a region of Ireland, arrives at results which are comparable is a coincidence.

Context

Another issue with the claim is the shakiness of comparing GDP figures.

ONS figures on regional GDP come with several health warnings. The year-by-year breakdown of GDP is given in both nominal terms (i.e. not adjusted for inflation) and in chained volume measure (CVM, which is adjusted for inflation).

The ONS recommends using the CVM data for comparing GDP between different periods of time. For comparisons between different regions, it recommends the nominal data.

This claim is about GDP comparisons between different regions, over different periods of time.

However, while adjusting for inflation is necessary, it does not necessarily fix the problem it is trying to address. Inflation itself can be regional. The ONS has previously published information on relative regional consumer price levels but does regularly produce such data. Furthermore, the use of GDP itself as measure has been put under increased scrutiny in recent years. 

Conclusions

The merits of granular comparisons using GDP can be dubious – as can interpretations of that data.

Official figures can be used to make calculations with results that are similar, but not the same, to the statistic in the claim.

However, Ireland’s Future used incorrect data to calculate its claim.