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Box sets » Conditioning assumptions

  • Interest rates
  • Oil prices
  • Exchange rates
  • Forecast evaluation report - December 2018 | Box: 3.1 | Page: 36

    Impact of post-referendum rise in inflation on the public

    One unforeseen economic development affecting our March 2016 forecast was the upside surprise in inflation in 2017-18 as a result of the fall in the exchange rate. This box described the effect of that surprise on receipts, spending and borrowing.

    Economy categories: Exchange rates, Inflation

    Fiscal categories: Public sector net borrowing, Public spending, Receipts

    Read more
  • Economic and fiscal outlook - March 2017 | Box: 3.1 | Page: 42

    Recent trends in consumer credit

    Strong growth in consumer credit in the run-up to our March 2017 Economic and fiscal outlook had prompted concerns among some commentators about its sustainability. In this box we considered the drivers of consumer credit growth, including the role of dealership car finance, and the extent to which it may have supported household consumption growth.

    Economy categories: GDP by expenditure, Interest rates, Household consumption, Household balance sheet

    Read more
  • Economic and fiscal outlook - March 2016 | Box: 4.4 | Page: 163

    Debt interest spending and the yield curve

    Since our March 2014 Economic and fiscal outlook, our debt interest spending forecast was revised down significantly as market expectations of the interest rates at which the Government can borrow and service its debt moved progressively lower and as inflation fell. This box explained some possible factors that could have caused market expectations of interest rates to rise and the effect on the fiscal position of a sudden increase in interest rates.

    Economy categories: Interest rates

    Fiscal categories: Debt interest spending, Public spending

    Cross-cutting categories: Financial sector

    Read more
  • Economic and fiscal outlook - March 2015 | Box: 2.1 | Page: 27

    Why have oil prices fallen by so much?

    An important economic development in the run-up to our March 2015 Economic and fiscal outlook was the sharp drop in oil prices, which had fallen to less than half the $115-a-barrel peak that they had reached in June 2014. In this box we considered the relative importance of demand- and supply-side factors in explaining lower oil prices. (See also Box 3.1 from that EFO for a discussion of the effects of those lower prices on the UK economy.)

    Economy categories: Oil prices

    Cross-cutting categories: External forecasts

    Read more
  • Economic and fiscal outlook - March 2015 | Box: 3.1 | Page: 41

    Oil prices and the economy

    An important economic development in the run-up to our March 2015 Economic and fiscal outlook was the sharp drop in oil prices, which had fallen to less than half the $115-a-barrel peak that they had reached in June 2014. In this box we considered the channels along which those lower oil prices were likely to affect the UK economy. (See also Box 2.1 from that EFO for a discussion of the demand- and supply-side factors contributing to lower oil prices.)

    Economy categories: Nominal GDP, Oil prices

    Fiscal categories: Oil and gas revenues, Receipts

    Read more
  • Economic and fiscal outlook - March 2015 | Box: 4.4 | Page: 154

    Forecasting debt interest spending

    Our March 2015 Economic and fiscal outlook forecast highlighted large changes in our debt interest forecast since previous fiscal events and the added complexity that debt interest was expressed net of the effect of gilts held by the Bank of England Asset Purchase Facility (APF) associated with past quantitative easing. This box described how we produced the debt interest forecast and illustrated some of the sensitivities to which it was subject.

    Economy categories: Interest rates

    Fiscal categories: Asset Purchase Facility, Debt interest spending, Financial transactions, Network Rail, Public sector net borrowing, Public sector net debt, Public spending

    Cross-cutting categories: Forecast process, Pensions

    Read more
  • Economic and fiscal outlook - March 2015 | Box: 5.1 | Page: 189

    Changes in our forecast for the debt profile in 2015-16

    In our first June 2010 EFO, the debt-to-GDP ratio was forecast to fall by 2 per cent in 2015-16. This box explored how our debt-to-GDP forecast for 2015-16 evolved over time. It highlighted the contribution of the primary balance and the impact of other factors (including asset sales and the growth-interest differential) on the debt-to-GDP ratio forecast.

    Economy categories: Interest rates

    Fiscal categories: Primary balance, Public sector net debt

    Read more
  • Economic and fiscal outlook - March 2014 | Box: 3.4 | Page: 48

    Bank deposits, mortgage lending and the housing recovery

    In 2013, households’ balances in ‘time deposit’ accounts (savings with fixed maturity) fell by £36 billion. This box outlined possible reasons for this by exploring the wider household savings behaviour. The cumulative change in annual deposit flows showed rapid increases in 'sight deposits'. This was possibly explained by narrowing spreads between 'time' and 'sight' deposit interest rates or normalisation of household investment behaviour. Changes in annual mortgage flows also suggested that revival of housing market activity could have been responsible for switching between deposit types. The ability of households to shift very large deposit balances over relatively short timeframes was one reason why the impact of savings and pensions measures discussed in Box 3.3 of the same EFO was subject to considerable uncertainty.

    Economy categories: Household balance sheet, Household saving ratio, Housing market, Interest rates, Property transactions

    Cross-cutting categories: Financial sector

    Read more
  • Economic and fiscal outlook - March 2014 | Box: 3.5 | Page: 69

    The impact of rising interest rates in household finances

    We expected debt servicing costs as a share of disposable income, or ‘income leverage’, to rise as our forecasts for house price inflation outstripped income growth and Bank Rate gradually increased. This box discussed the extent to which mortgage servicing costs were likely to increase over the forecast period and the implications of this for household behaviour, using information from the Bank of England/NMG survey.

    Economy categories: GDP by expenditure, Household consumption, Interest rates, Household balance sheet

    Cross-cutting categories: Financial sector

    Read more
  • Economic and fiscal outlook - December 2013 | Box: 3.1 | Page: 40

    Forward guidance by the Monetary Policy Committee

    On 7 August 2013, the Bank of England announced that it would not consider raising Bank Rate, then at 0.5 per cent, until the unemployment rate had fallen to 7.0 per cent. However, the Bank also detailed certain conditions, which if breached, would make it consider tightening monetary policy sooner. This box, from our December 2013 Economic and fiscal outlook, examined where our forecast stood in relation to these conditions.

    Economy categories: Employment and unemployment, Inflation, Interest rates, Labour market

    Cross-cutting categories: Monetary policy

    Read more
  • Economic and fiscal outlook - November 2011 | Box: 2.2 | Page: 28

    Lower-than-expected growth in 2010-11

    UK GDP had grown less quickly in 2010-11 than the OBR forecast in June 2010. This box decomposed the forecast error by expenditure component and discussed possible explanations, including the external inflation shock.

    Economy categories: Business investment, GDP by expenditure, Government consumption, Household consumption, Net trade, Nominal GDP, Oil prices, Residential investment

    Read more
  • Economic and fiscal outlook - March 2011 | Box: 3.2 | Page: 47

    The oil price and the economic forecast

    At the time of publication, oil prices had risen by £15 since the previous forecast. This box, from our March 2011 Economic and fiscal outlook, considered the potential economic implications, including the short-run effects on inflation and household consumption as well as possible longer-run effects on potential supply and the equilibrium capital stock.

    Economy categories: Oil prices

    Read more
  • Economic and fiscal outlook - March 2011 | Box: 4.1 | Page: 111

    The oil price and the fiscal forecast

    The world price of oil increased sharply in 2010, reflecting rising world demand and unrest in the Middle East and North Africa. This box explored the impact this had on our public finances forecast at the time, from higher North Sea oil and gas revenues to the second round effects stemming from higher inflation.

    Economy categories: Oil prices

    Fiscal categories: Fuel duty, Oil and gas revenues, Receipts

    Read more
  • Budget forecast - June 2010 | Box: C1 | Page: 94

    Short and long-term interest rates in the pre-Budget and Budget forecasts

    Ahead of the June 2010 forecast, the OBR published a 'pre-measures' forecast, noting that the use of market expectations of interest in that forecast was potentially inconsistent, depending on markets' expectations of both fiscal tightening and the MPC's reaction to it. This box set out some illustrative calculations of the possible impact of the June 2010 Budget on long-term interest rates, and discussed the possible implications for comparisons between the pre-Budget and June Budget forecast

    Economy categories: Interest rates

    Cross-cutting categories: Monetary policy

    Read more
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