As from September 2014, the new European System of Accounts (ESA) 2010 entered into force, replacing ESA 1995.

The National Statistics Office said today that the new system essentially modernises the previous standards contained in ESA 1995. Such changes are needed periodically in order to adapt the national accounts to the changing dynamics of economic activity, such as the advent of the knowledge economy.

Updates are also needed in order to comply with international standards and preserve statistical comparability beyond the European Union.

The changes in ESA 2010 are important but not radical. The biggest conceptual change is that research and development spending is now being recorded as investment rather than as current expenditure. While this increases the level of Gross Domestic Product, it has a negligible impact on the growth rate of Gross Domestic Product from year to year.

The new methodology also provides for more comprehensive and more comparable information on pension entitlements, starting in 2017, which is clearly important in the light of ageing societies. It also provides more precise principles for classifying units into or outside the government sector.

The changeover to ESA 2010 has been discussed and planned for several years, since the agreement on the underlying new international standard (System of National Accounts 2008). The implementation of ESA 2010 coincides with normal periodic revisions of the national accounts produced by National Statistical Institutes.

Grouping such changes is usually preferred to constant updates which can become confusing for users. The main changes other than those related to ESA 2010 are:

• Benchmark revisions, in which national methodologies and data sources are reviewed and updated. In some cases, benchmark revisions may generate a more signficant revision to Gross Domestic Product than the changeover to ESA 2010.

• The harmonisation of measurement of certain illegal activities, such as prostitution and the production and trafficking of drugs. While these were already included in the official definition of Gross Domestic Product under the old standard, implementation had varied from country to country. A common methodology for recording these activities is now being applied.

The successful implementation of these changes has been a Europe-wide project requiring a significant, co-ordinated effort from National Statistical Institutes and Eurostat.

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