Fabian Demicoli

New accounting standard to increase EU GDP by 2.4%

 EU annual gross
domestic product (GDP) figures will be revised upwards by around2.4 % when the
EU switches to a new accounting standard in September 2014, Eurostat, the
statistical office of the EU, announced on 16 January.        

The change per EU
country will range from close to zero up to 5%, depending on the individual
country. This purely methodological change will be compounded with other
changes, notably a regular benchmark revision. The European System of National
and Regional Accounts (ESA 2010) replaces ESA 1995. The new standard reflects
important changes in the economy over the past 20 years, in particular the
increasing role of ICT in production processes, the growing importance of
intangible assets including intellectual property, and the globalisation of
economic systems. One of the main improvements is that R&D investment will
be capitalised rather than treated as a current expenditure. This change
accounts for 80% of the increase in GDP. Expenditure on weapon systems will
also be capitalised and the transparency and comparability of pension schemes
between countries will be enhanced. The switch to ESA 2010 is part of a
worldwide move to a new accounting system called System of National Accounts
2008, which was implemented in the United States last August.

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