Wind and wave forces will be calculated for the first time in the calculation of the size of the country’s economy, part of the change approved by the United Nations.
Assets like oil fields have been considered according to the rules – last updated in 2008.
This update is designed to capture areas that have grown since then, such as the cost of using natural resources and the value of data.
These changes come into effect in 2030, which could mean an increase in estimates of the size of the UK economy, which promises to spend a fixed economy or more expensive aid on defence.
The economic value of wind and waves can be estimated from the price of all energy generated by a country’s turbine.
The update also treats the data itself as an asset, based on the assets of the server and cable.
Governments use a common rulebook to measure the size of their economy and how they grow over time.
According to Diane Coyle, the changes to the rulebook are “adjustment, not rewrites.”
Ben Zaranko of the Institute for Financial Studies (IFS) calls it “accounting” change, not real change. “We won’t be better in a material sense, and tax revenues won’t be higher,” he explained.
But this can make the economy look bigger, thus bringing future spending headaches for the UK government.
Labour, for example, has been committed to allocating a fixed percentage of the size of the economy to national defense and aid.
If the new regulations increase the size of the economy by 2-3% in 2030, it could increase defence spending by £2 billion.
This is a small part of the government’s overall budget, but the capital is currently being funded for additional defence spending or the government’s headroom for compliance with its self-imposed fiscal rules (£10 billion) compared to the cuts in overseas aid.
Government expenditure regulators (Office of Budget Responsibility (OBR)) will not include the impact of these new rules on government finances to assess government finances in March this year.
This makes the new rules possible for the Prime Minister to become a future headache rather than a direct headache.
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