The composition of GDP can be as important to the fiscal forecast as the headline measure, because some components will be more ‘tax rich’ than others. A forecast that alters the composition of GDP can therefore have a significant impact on the public finances, even if the path of GDP itself is unchanged.
The expenditure approach to measuring GDP, known as GDP(E), estimates the money spent on total output in the economy. Expenditure is split into household consumption, private investment, government consumption and investment, as well as exports and imports of goods and services. As with overall GDP, it can be measured both in cash or nominal terms and in inflation-adjusted real or volume terms.