Forecast evaluation report – December 2021

Our annual Forecast evaluation report (FER), examines how our forecasts compare to subsequent outturn data and identifies lessons for future forecasts.

In this FER, we analyse the accuracy of our forecasts and scenarios over the first year of the pandemic and how our understanding of the economic and fiscal impact of the pandemic evolved.

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Forecast evaluation report - December 2021

December 9, 2021 – 945.47 KB

Supporting documents

Boxes

Within each of our key publications we include topical ‘boxes’. These self-contained analyses are unique to this publication and tend to cover recent developments in the economy or public finances that complement the main discussion of our analyses.

Forecasting sectoral output during the pandemic

Chart 2.A: Change in level of output relative to January 2020 by sector
One of the unique features of the coronavirus shock was its extraordinary degree of sectoral differentiation. In this box, we explored the accuracy of our sectoral forecasts and considered the key drivers of forecast errors.

Tax implications of pandemic-induced changes in the income distribution

Chart 3.A: Changes in pay and tax receipts across the employee earnings distribution between 2019-20 and 2020-21
The impact of the pandemic and the national lockdowns has not been equal across the earnings distribution. While it was expected that income tax receipts would be significantly impacted, this box showed that the growth in receipts from higher earners has more than outweighed the fall in receipts from the lowest earners.

The rise and fall of tax debt during the pandemic

Chart 3.C: HMRC tax debt balance
The Government introduced several tax deferral policies in response to the pandemic in an attempt to mitigate the strain on businesses. This box provided an update of the impact of those policies, and the level of tax debt still owed.