Monday, 18th February 2008
Tim Buckley Owen
Whether the UK’s reputation as a financial centre suffers as a result of the Northern Rock bank affair remains to be seen. However, now that the UK Treasury has finally announced the bank’s temporary nationalisation http://digbig.com/4wkbd an intriguing side issue emerges regarding the way we as information professionals deal with macroeconomic data.
Nearly two weeks before the government announced that it was going to take Northern Rock into public ownership, the Office of National Statistics (ONS) stated that it intended to reclassify the bank in the UK’s national accounts as part of the public sector. The reclassification took place with effect from 9 October 2007, the date on which the Bank of England http://digbig.com/4wkbq the Financial Services Authority and the Treasury announced revised arrangements that required Northern Rock to seek permission from the Bank of England before undertaking certain activities.
Does this mean that the ONS was privy to advance intelligence denied to everyone else? Of course not. It was simply taking a decision that was in line with international statistical guidance.
‘It should not be confused with “nationalisation”, which is a term commonly used
to refer to public ownership,’ the ONS explained http://www.statistics.gov.uk/pdfdir/cnr0208.pdf on 7 February. ‘National Accounts classification... does not always coincide with ownership,’ it continued. ‘The decision is based on a judgement that the public sector has the power to control Northern Rock plc’s general corporate policy.’
It’s a rare insight into the professional judgments that lie behind the macroeconomic data that is the bedrock of many business decisions – data that is the basis of observations and advice offered in commercial economic surveys and market reports from Business Monitor, the Economist Intelligence Unit, or individual banks.
‘Unless decision-makers trust the statistical evidence they will not regard it as good enough to use it.’ So says the UK’s official statistics watchdog the Statistics Commission, in Official Statistics: Value and Trust http://digbig.com/4wkbj its valedictory report before it is wound up and replaced by a new Statistics Board at the end of March.
As the Commission readily acknowledges, UK official statistics and statisticians compare favourably with the best around the world. But it does wonder whether the statisticians always explain the messages behind the figures sufficiently, and whether they have developed effective dialogue with decision makers.
In supporting those decision makers with the products of our desk research, we information professionals probably place automatic reliance on macroeconomic data – percentage of gross domestic product taken up by public expenditure, for example, as a measure of economic health and investment risk. Perhaps the projected £110 billion price tag on public support for Northern Rock should prompt us to dig a little deeper from time to time into what the figures actually mean.
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