Be wary of attempts to rewrite the recent economic history books

"The past isn't dead. It isn't even past," wrote William Faulkner. That certainly applies to the economy.

The Office for National Statistics (ONS) said last week that it had been examining its estimate for telecoms output-price inflation between 2010 and 2015. Research suggests statisticians may have been considerably overestimating this in light of large increases in bandwidth volumes available to business customers over that period.

This tentative and pretty technical bit of work has been seized upon in some quarters as implying a huge rewriting of recent UK economic history.

The BlackRock fund manager and former special advisor to George Osborne, Rupert Harrison, concluded that: "A lot of what we thought we knew about the economy is probably wrong."

Following up, Harrison's ex-boss himself tweeted that: "Official statistics underestimated growth for 2010-2015 and overestimated inflation, and therefore real income growth was higher during that period. Good to hear, although would have been nice to know at the time…."

The Times in an editorial joined the revisionist party stating: "The result is likely to have been an understatement of GDP and an overstatement of inflation."

A cynic might argue that it would be convenient for Osborne and Harrison to push the idea that when they were in charge of the British economy, GDP and income growth was much healthier than currently shown in the official statistics.

But leaving aside the motivations, are the conclusions that are being drawn valid? And the answer is that there's something a bit previous about them, to put it mildly.

First some perspective. Telecoms account for less than 2 per cent of GDP. That's not negligible, but it's not big enough to fundamentally change the picture of the economy, even if the sector really did grow substantially faster in real terms over the period in question.

And, in any case, aggregate output figures are always "balanced" by the ONS to aggregate expenditure calculations of GDP. In simple terms, this means that even if telecoms output is judged to have been stronger, output in other sectors of the economy would automatically have to be revised down to compensate. That's why Richard Heys of the ONS himself has stressed this telecoms prices revision, if it were implemented into the national accounts, would be very unlikely to affect the overall GDP figures.

But what about consumer welfare? Doesn't this work also suggest more bandwidth for ordinary phone and broadband customers too, giving them more bang for each buck of their expenditure? Hasn't consumer price inflation therefore been exaggerated too, and real income growth correspondingly underestimated? Again, we shouldn't jump to conclusions. First, telephone services and equipment account for 2.5 per cent of the UK's representative consumption basket. Again, that's not really big enough to have the kind of dramatic impact on the overall inflation rate that some of the revisionists are implying.

Further, the ONS's new work applies only to business-to-business telecoms services, not customer purchases of mobile phone data. And there is already an adjustment for rising quality for things like mobile phone tariffs in the Consumer Price Index. This adjustment might turn out to be too small, but it's misleading to imply there currently isn't any allowance at all for the fact that customers could be getting more for their money due to technological advances.

The issue of how statisticians account for the rise of the fast-growing digital economy is certainly a very important one. And there may well be GDP revisions ahead, perhaps even consumer inflation revisions, which have hitherto been extremely rare. The picture of the economy in the past is actually changing all the time due to regular methodological revisions in a whole host of areas by the ONS. The past really isn't dead.

Yet at the same time it's spurious to make bold assertions based on thin evidence and perhaps wishful thinking about what the impact is going to be. There's also an irony about the former Conservative Treasury team claiming some vindication for their economic strategy on the basis of this latest research, given the core rationale for their controversial austerity programme was not rising household incomes, or even GDP growth, but rapid reductions in public borrowing and the overall government deficit.

Recall that in the 2010 "emergency" Budget, Osborne outlined bold plans to achieve a surplus on the structural current budget in 2014-15. In fact it was still 2.6 per cent of GDP in that year. And there is still no projected overall surplus in sight, despite the many promises of ministers. The theory that the economy has been doing much better than implied by the current official figures sits rather uncomfortably with the fact that tax revenues have been so disappointing relative to expectations eight years ago.

The past may not be dead when it comes to official economic statistics, but that doesn't mean we can casually rewrite history in a way that suits our interests and reputations.