Box sets » Economic and fiscal outlook - November 2015
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Recent estimates of UK GDP growth represent an early draft of economic history that will be revised, often substantially, over time. OECD found that initial estimates of UK GDP growth have tended to be revised up over time. This box also highlights revisions to estimates of US and UK productivity growth between July and November 2015, and the substantial productivity shortfall relative to the US and relative to the pre-crisis trend in the UK.
In each Economic and fiscal outlook we publish a box that summarises the effects of the Government’s new policy measures on our economy forecast. These include the overall effect of the package of measures and any specific effects of individual measures that we deem to be sufficiently material to have wider indirect effects on the economy. In the 2015 Autumn Statement and Spending Review, we made a number of adjustments to real and nominal GDP, the labour market, inflation, and the housing market.
In July 2015, the Government announced the ‘National Living Wage’ (NLW) for workers aged 25 and above. This box from our November 2015 Economic and fiscal outlook outlined how revisions to the wider economy forecast affected our NLW forecast and also explored some of the potential labour market and employer responses to the NLW.
In our November 2015 Economic and fiscal outlook, government consumption was forecast to fall by 5.2 per cent of GDP between its peak in 2009 and 2019. This box looked at historical and international comparisons to give some context for this fall, as well as considering the possible impact on the composition of nominal GDP.
At Budget 2012, the Government stated its aspiration to increase the value of UK exports to £1 trillion by 2020. This box outlined the main drivers of export growth in our November 2015 Economic and fiscal outlook and the implications for our forecast relative to the Government's aspiration.
We always try to forecast the public finances consistent with how the ONS will measure them once it has implemented its classification decisions, so that our forecasts will be consistent with that eventual treatment. This box outlined the items included in our November 2015 forecast which the ONS had announced, but had yet to implement.
Modelling changes were made to the deductions element of the VAT model and to introduce a new model for NICs. The box outlined the modelling changes and the likely effect on receipts.
The July 2015 Budget included a large number of complex welfare measures that cut across multiple benefits with many interactions. At Autumn Statement 2015, we identified a number of measures where interaction effects had not been correctly estimated or classified. In this box of our November 2015 EFO, we discussed the re-estimation and reclassification of the interaction effects of a number of welfare measures. This included the reclassification of three tax credits measures and the measure extending the `lone parent obligation’ to ensure that these costings were consistent with our marginal universal credit (UC) forecast. The impact of cuts to tax credits on housing benefit entitlement were also re-estimated and reallocated to the housing benefit forecast from the tax credits forecast as the effect had previously been incorrectly allocated to tax credits.