LONDON (Reuters) - Britain will launch a new set of early warning indicators aimed at spotting the next big economic downturn more quickly, based on the volume of road traffic, businesses’ value-added tax returns and how long ships spend in port.
The Office for National Statistics has been under pressure to use more of the digital data created by businesses and consumers which other statistics agencies are streaming into their measurements of the economy.
The Bank of England is likely to pay attention too, as it is trying to improve its understanding of early signals coming from Britain’s economy as it navigates Brexit.
“Policymakers and analysts demand faster insight into the state of the UK economy in order to make informed, timely decisions on matters such as the setting of interest rates,” said Louisa Nolan, the ONS’s lead data scientist.
The ONS said its new indicators would be launched in April and in many cases they would be available a month earlier than gross domestic product data, the main measure of how fast an economy is growing or shrinking.
The ONS cautioned against using the new indicators as predictors of GDP but said they would be able to identify large changes to economic activity.
A new VAT index, which will show whether businesses are seeing more or less turnover, would have spotted the first quarter of the 2008-09 recession in Britain five months before it showed up official estimates, although GDP figures have been improved since then, the ONS said.
There was a “surprisingly good correlation” between the ONS’s shipping indicators and imports, while traffic counts for heavy goods vehicles in England were consistent with at least some economic events, such as the financial crisis.
The traffic flows numbers might also help to measure how much Britain’s economy can grow without creating excessive inflation pressure, the ONS said.
Reporting by William Schomberg, editing by David Milliken