ICAEW chart of the week: China

The #icaewchartoftheweek is on China: with 1.4bn people, the largest country in world by population.

Following up on our chart on the United States of America a couple of weeks ago, this time we are looking at China, which has more than four times as many people as the USA and more than 20 times as many as the UK.

There are a number of different ways of allocating China’s 33 first-level administrative divisions (excluding Taiwan) into wider regions, but for this particular chart we have gone with the five military districts used by the People’s Liberation Army, which divides up the provinces into Western, Southern, Central, Eastern and Northern China.

Three regions are similar in population size to the USA, with the 346m population of Central China and 337m of Southern China exceeding the USA’s 332m, while Eastern China with 315m people is not far behind. Northern China with 235m people has about 70% of the numbers in the USA, while Western China with 183m has just over half as many. They all substantially exceed the UK’s 69m population.

At 9.60m square kilometres China is marginally smaller than the USA’s 9.84m, although if inland waters are excluded this turns around with China’s 9.33m square kilometre land area exceeding the USA’s 9.15m. Hence, there is around four times as much space per person in the USA than in China, which in turn has twice as much space per person as for the UK.

Economically, China was around 30% bigger than the USA on a ‘purchasing power parity’ (PPP) basis in 2019, when US GDP was $21.4tn. However, based on actual exchange rates, China’s economy was around two-thirds of the size. Economic activity per person in China in 2019 was around $20,000 on a PPP basis and $10,000 on an actual exchange rate basis, compared with the $64,000 or so per person that was generated in the USA. This compares with the UK, where economic activity in 2019 was in the order of $45,000 per person using PPP and $41,000 using actual exchange rates.

China is not expected to remain the largest country by population for much longer, with India’s just under 1.4bn people expected to grow at a faster rate to overtake China within the next decade.

Image of table showing population by province within each region. For readable version of the table please go to the original ICAEW chart using the link at the end of this post.

This chart was originally published on the ICAEW website.

ICAEW chart of the week: Foreign, Commonwealth & Development Office

11 September: The UK’s highly regarded diplomatic service in the FCO was combined last week with the UK’s highly respected international development department DfID to form a new government department – the FCDO.

Chart on net expenditure 2019-20 FCDO £2,750m + DfID £10,350m = £13,100m.

The newly established Foreign, Commonwealth & Development Office (FCDO) is the subject of the #icaewchartoftheweek, illustrating the amounts spent by its predecessor departments in the financial year ended 31 March 2020. The Foreign & Commonwealth Office (FCO) incurred net expenditure in the order of £2,750m, while the Department for International Development (DfID) spent £10,350m, a combined total of £13.1bn.

Although DfID was the bigger department in financial terms, the FCO was larger operationally with 13,751 staff in 2019-20 (5,263 in the UK and 8,488 abroad) compared with the 3,535 employed by DfID (2,628 in the UK and 773 abroad). As a consequence, net operational spending amounted to somewhere in the region of £1,250m for the FCO, while DfID cost in the order of £350m to run.

The FCO spent approximately £700m in 2019-20 on international programmes, including grants to the British Council and the BBC World Service amongst others. The other big element of its spending of just under £800m was on conflict prevention, stability and peacekeeping.

DfID spent around £2,150m on international development programmes and organisations, policy, research and evidence and humanitarian aid and £750m on conflict, security and stabilisation. Around £3,000m was spent on economic development, while £4,100m went to regional programmes, including approximately £900m in west and southern Africa, £1,300m in east and central Africa, £850m in the Middle East and north Africa and £1,050m in Asia and elsewhere in the world.

DfID has provisionally calculated that total development spending across the UK Government, including by the FCO, DfID, Home Office, Business, Energy & Industrial Strategy and Department for Environment, Food and Rural Affairs departments, amounted £15.2bn in total in the 2019 calendar year. This was in line with the UK Government’s legally binding commitment to spend 0.7% of Gross National Income on development. This includes a proportion of the EU’s spending on international development but excludes the UK’s contributions towards development within the EU, in particular in eastern European member states.

The coronavirus pandemic has reduced the size of the economy this year and hence the 0.7% calculation will result in a smaller amount to spend in 2020-21, hence the combined budget for the FCDO will be smaller than the amount spent in the last financial year.

The new department is abbreviated to FCDO in writing, which the Government is insisting should be spoken out loud as ‘focado’ (similar to the online grocery store), no doubt in a valiant attempt to prevent other forms of short-form pronunciations becoming popular.

This chart was originally published on the ICAEW website.

ICAEW chart of the week: United States of America

4 September 2020: It is back to school for the #icaewchartoftheweek with some graphical geography to illustrate the 50 states and one district that together comprise the United States of America.

Map of the USA split into five regions: West 70m people, Southwest 43m, Midwest 69m, Southeast 86m, Northeast 64m.

Surprisingly, there is no single official set of regions for the USA, with states classified differently according to which federal agency is responsible for the classification. For example, the US Census Bureau uses four regions (the Northeast, the Midwest, the South and the West), while the Bureau of Economic Analysis allocates the states between eight regions, the Office of Management and Budget uses 10, the federal court system 11, and the Federal Reserve 12.

For the purposes of this particular chart, we have allocated the states based on an unofficial but commonly accepted grouping of states: the West, the Midwest, the Northeast, the Southwest and the Southeast. Unlike the census regions, Delaware, Maryland and Washington DC are included as part of the Northeast, while Arizona and New Mexico (part of the West in some classifications) are combined with Texas and Oklahoma to form the Southwest, with the remaining Southern states constituting the Southeast region.

In terms of population, this gives five regions of which three – the West with 70m, the Midwest with 69m and the Northeast with 64m – are pretty close to the UK’s current population of 67m. The Southeast’s 86m population is almost 30% more than the UK (being closer to Germany’s 84m), while the Southwest’s 43m is around 35% less than the UK’s population (slightly below Spain’s 47m).

Although the UK is around a fifth of the size of the USA in terms of population, it is much much smaller in terms of area, with the USA’s 9.84m square kilometres more than 40 times the UK’s 0.24m square kilometres. That is around eight times as much space per person as for the UK.

Image of table showing the states of the USA by region. For the table itself, click on the link at the end of this post to go to the ICAEW website


This chart of the week was originally published on the ICAEW website.

ICAEW chart of the month: Cricket – England v West Indies 3rd Test

31 July: Summer is the time for a special edition of the #icaewchartofthemonth, celebrating the victory of the English men’s cricket team over the West Indies in the 3rd Test at Old Trafford, resulting in a 2-1 series win for England.

Chart: England 1st innings 369 + 2nd innings 226 = 595. West Indies 1st innings 197 + 2nd innings 129 = 269 short of target.

Many explanations of cricket as a sport tend to focus on the intricacies of how it is played but in practice, the aim is pretty simple – one team sets a target by scoring as many runs as they can and the other team then tries to beat that target. Of course, like most sports, the joy is often as much in the skills of the players and the tactics deployed as much as who wins or loses, but the principal objective remains the same: score more runs than the other team.

West Indies no doubt regretted putting England into bat first, as England proceeded to score 369 runs in the first innings, significantly better than the 197 the West Indies team achieved in reply. England then extended their total by adding 226 runs before declaring, giving the West Indies a stretching target of 398 to tie or 399 to win. A strong England bowling performance meant West Indies only achieved 129 by the time they were bowled out mid-afternoon on the fifth day, falling short of the overall target of 595 runs by 269.

Stuart Broad had a stand-out match, scoring 62 runs in England’s first innings and taking 6 and 4 wickets respectively in the West Indies’ two innings – including the 500th wicket of his international test career. Chris Woakes, who took 5 of the West Indies’ wickets in their second innings, was the other key English bowler, while Rory Burns (scoring 147 runs across two innings), Ollie Pope (91) and Joe Root (85) were the highest scoring English batsmen. More details are in the scorecard.

Cricket can be a mystery to many, with unique features such as whole days abandoned to rain – as the fourth day of this test match was. Some have even likened cricket to a ritualised rain-dance, helping to make England the green and pleasant land that it is. For others, cricket is a different sort of mystery, providing sporting magic that makes an English summer complete.

The #icaewchartofthemonth and #icaewchartoftheweek will be off for August before returning on Friday 4 September. We hope that you will be able to take some time off to enjoy the summer, wherever and however that may be possible.

This chart was originally published by ICAEW.

ICAEW chart of the week: Whole of Government Accounts

24 July: Liabilities of £4.6tn exceeded assets of £2.1tn at 31 March 2019 in the latest set of consolidated financial statements for the UK public sector.

UK public sector balance sheet at 31 March 2019: liabilities £4,555bn, assets £2,099bn, taxpayer equity -£2,456bn.

The topic for the #icaewchartoftheweek is the Whole of Government Accounts (WGA) published on Tuesday. Despite taking 15½ months to prepare (way too long, even with the additional delays caused by the pandemic), this is still one the most important documents published by the Government each year.

The good news is that the UK is one of the leading countries in the world in providing fiscal transparency, with this being the tenth WGA, incorporating the financial results of over 9,000 public bodies for the 2018-19 financial year. While many countries are working to adopt accruals-accounting for their public finances, the UK is still the only major economy to publish a full set of accounts covering all levels of government in accordance with internationally recognised accounting standards.

The bad news is the financial position presented by those financial statements, highlighting the weaknesses in the public finances that existed even before the coronavirus pandemic. Total liabilities of £4.6tn at 31 March 2019 were substantially higher than the £1.8bn reported for the headline measure of debt in the National Accounts, prepared in accordance with statistical standards.

To find out more, ICAEW has put together a summary analysis of the Whole of Government Accounts 2018-19.

Alternatively, the full 200 pages of accounting and disclosure goodness that constitutes the WGA can be found here.

This chart was originally published by ICAEW.

ICAEW chart of the week: A square root-based recovery?

17 July 2020: Debate rages about which symbol to attribute to the shape of the economic recovery.

Chart on OBR Real GDP growth forecast. Shows huge economic hit in the first half of 2020 with potential recovery paths to Q1 2025. Upside scenario returns to previous trend by 2021, central scenario recovers but not fully, and downside is even worse.

The #icaewchartoftheweek is on the economy this week, with the Office for Budget Responsibility indicating that hopes of a sharp V-shaped recovery have receded. Instead, their central scenario is for a square root-based recovery – with economic activity recovering less quickly than originally hoped and not to the same level predicted before the pandemic took hold in the UK.

According to the OBR, quarterly GDP fell from £558bn in the fourth quarter of 2019 to £432bn before inflation in the second quarter of this year, a drop of almost 23% in the level of economic activity. Under the OBR’s central scenario GDP in real-terms is not expected to get back to where it was until the fourth quarter of 2022. At a predicted £584bn (excluding inflation) in the first quarter of 2025, GDP would be 3% lower than where it was predicted to be prior to the pandemic.

The OBR hasn’t completely ruled out a V-shaped recovery as a possibility and their upside scenario would see the economy returning to the previous trend by the second quarter of 2021. However, with job losses starting to accelerate, such a speedy return to trend seems increasingly unlikely.

The good news is that the OBR’s downside scenario, for which no symbol has yet been assigned, is not as shallow as the dreaded U-shaped recovery that some economists are worried about. In the downside scenario, economic activity recovers by the middle of 2024, unlike a U-shaped recovery that might extend into the second half of the 2020s.

In practice, the fortunes of different sectors of the economy are likely to vary, with some suggesting the recovery is more likely to be K-shaped, with some sectors stalling just as others emerge to grow back strongly following the end of the lockdown. The Government will be hoping that the fiscal interventions it has announced to support the hospitality, leisure and housing sectors in particular will help prevent the ‘full K’.

This chart of was originally published by ICAEW.

ICAEW chart of the week: Fiscal interventions

10 July: Fiscal interventions reach £190bn as the Chancellor Rishi Sunak pours even more money into the economy in an attempt to keep it from stalling.

Components of £190bn in fiscal interventions - as set out in text below.

The Chancellor’s summer statement is the subject of this week’s #icaewchartoftheweek, with the £30bn ‘plan for jobs’ being the latest in a series of fiscal interventions in response to the coronavirus pandemic.
 
The measures announced included £9bn for a £1,000 job retention bonus for furloughed workers, £4bn for work placements and boosting work searching, skills training and apprenticeships, a £5bn boost for the hospitality and leisure industries in the form of a cut in VAT and discounts on eating out, and £12bn in economic stimulus. The latter includes over £5bn on infrastructure projects (as announced by the Prime Minister last week), £3bn to make homes energy-efficient and £4bn for a temporary cut in SDLT on housing sales under £500,000.
 
This brings the total amount of fiscal interventions to £190bn or around 9% of GDP, once an extra £33bn in spending on health and other public services is incorporated. This was also ‘announced’ yesterday, albeit by means of a small footnote buried inside one of the accompanying documents!
 
As a consequence, the fiscal interventions can be broadly split between £77bn being spent on supporting household incomes (£54bn on the furlough scheme, £15bn on the self-employed income support scheme and £8bn on universal credit), £30bn to support businesses (£13bn in business rates and other tax reliefs and £17bn in grants and other support), £53bn for public services and other (£39bn on health and social care and £14bn on public services and other spending), and £30bn in economic stimulus through the ‘plan for jobs’.
 
Businesses have also benefited from support with their cashflows through the deferral of £50bn in tax payments and £73bn of loans and guarantees.
 
This is not the end of the story for fiscal interventions. Not only are there are a number of sectors such as local government, universities, and manufacturing where rescue packages may be needed, but the Chancellor made clear that this announcement only covered the second of a three-phase response.
 
The third phase – rebuilding the economy – will be set out later in the year. How much additional money will be involved is anyone’s guess.

This article was originally published by ICAEW.

ICAEW chart of the week: UK population in lockdown

3 July 2020: Only a fraction of the population was working at their normal workplace during the Great Lockdown, but what will happen as businesses start to re-open and the furlough scheme becomes less generous?

UK population 67m: workforce 34m (working at workplace 9m, working from home 10m, furloughed 12m, unemployed 3m); outside workforce: children & students 16m, retired 12m, other inactive 5m.

The #icaewchartoftheweek takes a look at the workforce this week, illustrating how the lockdown has transformed the world of work over the last three months.
 
Our (admittedly) back of the envelope calculations based on ONS and HM Treasury data suggest that only around 9m of the 34m strong workforce have been working normally at their ordinary places of work during the lockdown, with somewhere in the region of 10m working remotely. In addition, just under 12m workers have been furloughed, comprising 9.3m employees on the coronavirus job retention scheme (CJRS) and 2.6m self-employed on the self-employed income support scheme (SEISS).
 
Unemployment, which was around 1.2m back in February, has jumped to an extrapolated estimate of around 2.7m by the end of June and is likely to grow still further as the furlough scheme becomes less generous from 1 July. The ONS’s experimental claimant count metric, which includes a wider group of workers needing financial support from the state, had reached 2.8m by the end of May and is expected to have exceeded 3m by the end of June.
 
The overall workforce of 34m excludes the 33m ‘economically inactive’ half of the population, comprising 16m children and students, 12m retirees and 5m other inactive individuals. The 2.1m students over the age of 16 included in this category excludes around 1m or so students with part-time work or who were looking for work prior to the lockdown who are included in the workforce numbers, while retirees include around 1.2m below the age of 65 who have taken early retirement. Other inactive individuals between the ages of 16 and 64 include 1.8m homemakers, 2.3m disabled or ill, and 1.1m not working for other reasons.
 
These numbers are a moving target as more workers will start to return to their normal workplaces over the next few weeks as the economy starts to re-open, even if many continue to work from home where they can. More worryingly, unemployment is likely to rise significantly with the furlough scheme requiring an employer contribution from July onwards and when it comes to an end in October.

This #icaewchartoftheweek was originally published by ICAEW.

ICAEW chart of the month: Cabinet government

26 June: The prime minister has announced a reduction in the number of government departments. How big is the cabinet compared to the rest of the world?

The news that the UK Government is reducing the number of government departments by one prompts the #icaewchartofthemonth to take a look at the size of government executives across the world.
 
As the chart highlights, with 26 members, the UK cabinet is one of the largest amongst major economies – comprising the prime minister Boris Johnson, 21 department ministers and four ‘ministers attending cabinet’. This does not include the Cabinet Secretary or other officials, meaning that cabinet meetings generally involve more than 30 people in total.
 
Compare that with the more compact 16-member German federal cabinet (Chancellor Angela Merkel and 15 departmental ministers) and the ten-member Chinese state council executive (comprising the premier Li Keqiang, five vice-premiers and four other senior departmental ministers).
 
It is certainly much larger than FTSE-100 company boards, where the average size is 11, and very few listed companies have more than 16 board members.
 
There is some debate around whether reducing the size of the UK cabinet would be more conducive to effective government. Some suggestions that the merger of the Department for International Development (DfID) with the Foreign & Commonwealth Office (FCO) to form the new Foreign, Commonwealth & Development Office (FCDO) in September is the first step on the way to that goal – with further mergers possible. However, although there will be one fewer departmental minister, there is a reasonable prospect of the minister responsible for development at the FCDO being invited to attend cabinet given its importance to the government’s global agenda.
 
Of course, merging departments is not the only way to achieve a slimmer cabinet – for example, the 31-member Russian cabinet (not shown in the chart) rarely meets as one body. Instead, there are regular meetings of the 10-strong prime ministerial group (the prime minister Mikhail Mishustin and nine deputy prime ministers) and occasional meetings of the 20-strong cabinet praesidium that includes the most senior ministers as well.
 
The UK Cabinet also works in this way to a certain extent, with critical decisions often being made in smaller groupings of senior ministers, such as the 9-member National Security Council, the 9-member Climate Change Committee or the 12-strong EU Exit Operations Committee for example. Canada, with its 37-member cabinet, also operates through a series of cabinet committees ranging from around 8 to 15 members. However, in both cases, the full cabinet still meets regularly and remains the formal executive body for authorising government actions.
 
With rumours of a cabinet reshuffle in the UK this autumn, it will be interesting to see whether moves to reduce the size of the cabinet will actually take place or whether we will see further development of cabinet committees as the places to be ‘in the room where it happens’.

This chart of the month was originally published by ICAEW.

ICAEW chart of the week: Economic lockdown

19 June 2020: Economic contraction sees monthly GDP per capita decline from £2,790 in February 2020 to £2,100 in April 2020.

UK GDP per person per month - April 2019: £2,740 +£50 = Feb 2020: £2,790 - Mar £160 - Apr £530 = April 2020: £2,100.

The #icaewchartoftheweek is on the economy this week, illustrating how average GDP per person per month increased from £2,740 in April 2019 to £2,790 in February 2020, before contracting sharply in March and April.

The increase of £50 per person in economic activity between April 2019 and February 2020 was predominately driven by inflation, with per capita economic growth of less than 0.4% over the 10 month period. This reflects just how weak the UK economy was immediately before the pandemic.

The modest increase up to February 2020 is dwarfed by the dramatic changes seen as a consequence of the pandemic, with severe curtailments in many parts of the economy leading to a 5.8% fall in economic activity in March and a further 20.4% in April according to provisional numbers from the Office for National Statistics.

Monthly GDP was estimated to be £183bn in April 2019, £187bn in February 2020 and £141bn in April 2020. The population was projected to be just over 66.7m in April 2019, rising to 67.0m by February 2020, before increasing very slightly in March prior to the lockdown and then falling a little in April.

The #icaewchartoftheweek is on the economy this week, illustrating how average GDP per person per month increased from £2,740 in April 2019 to £2,790 in February 2020, before contracting sharply in March and April.

The increase of £50 per person in economic activity between April 2019 and February 2020 was predominately driven by inflation, with per capita economic growth of less than 0.4% over the 10 month period. This reflects just how weak the UK economy was immediately before the pandemic.

The modest increase up to February 2020 is dwarfed by the dramatic changes seen as a consequence of the pandemic, with severe curtailments in many parts of the economy leading to a 5.8% fall in economic activity in March and a further 20.4% in April according to provisional numbers from the Office for National Statistics.

Monthly GDP was estimated to be £183bn in April 2019, £187bn in February 2020 and £141bn in April 2020. The population was projected to be just over 66.7m in April 2019, rising to 67.0m by February 2020, before increasing very slightly in March prior to the lockdown and then falling a little in April.

The dramatic transformation in the UK economy wrought by the lockdown is now extremely visible in the statistics, but it will take some time for the post-lockdown economic position to emerge in order to be able to see how much permanent damage has been done.

This article was originally published by ICAEW.