Box sets » Economic and fiscal outlook - March 2026
Net inward migration has been a significant driver of GDP growth, but its impact on GDP per person is much more uncertain. In this box, we explored how migration could affect participation and productivity, including through migrants’ age profile, labour market outcomes, and the adjustment of the capital stock.
Unemployment was higher than expected, but its cause – and therefore how likely it was to persist – was uncertain. In this box, we explored alternative scenarios in which the recent rise in unemployment proved to be either cyclical or structural, illustrating the potential implications for GDP, wages and inflation.
Real wage growth and productivity are closely linked to living standards and firms’ profitability. In this box, we explored how differences between real wage and productivity growth affected profit margins and the profit share of GDP, and considered the implications for investment and tax receipts.
Receipts were higher than expected due largely to stronger equity prices. In this box, we explored how higher equity prices boosted receipts from capital gains tax, corporation tax, inheritance tax, stamp duty on shares, and investment income, while highlighting the risks posed by equity market volatility.
Forecasts are inherently uncertain and should be viewed as the centre of a wide range of possible outcomes. In this box, we explored the uncertainty around economic and fiscal forecasts and highlighted how risk analysis, scenarios, and probability distributions can help to assess the likelihood of different outcomes.