1GJgFA7

More documents

Recommendations

Info

monetary policy and measures to support lending and revive the housing market”. 2 As the OECD Secretary-General set out “Britain has a long term economic plan, but it needs to stick with it”. 3 1.6 CPI inflation was 0.3% in January 2015, down from 0.5% in December 2014. The low inflation recently experienced by the UK has mostly been driven by global factors, notably the sharp fall in oil prices and the decline in food prices. The Governor of the Bank of England has set out that three-quarters of the movement in inflation relative to the 2% inflation target has been caused by food, energy and other goods prices. 4 Box 1.A sets out the impact of lower oil prices on the global and UK economy. Box 1.A: Impact of lower oil prices on the global and UK economy Between 2009 and 2011 global commodity prices rose rapidly, resulting in higher-thanexpected inflation in the UK, which peaked at 5.2% in September 2011. This in turn impacted the UK economy by reducing real incomes and raising business costs. In the second half of 2014 the oil price fell significantly. From a 2014 peak of $115 a barrel in June, the price of oil fell to a low of $46 a barrel in January. 5 It has since picked up, but the OBR’s medium-term assumption is around 17% lower than in December. The OBR judges that the fall in oil prices reflects both lower-than-expected global demand and higher-than-expected global supply of oil. 6 Chart 1.1: Crude oil (Brent) price since January 2014 140 120 Brent Crude Front Month Future, US $ per barrel 100 80 60 40 20 0 January 2014 March 2014 May 2014 July 2014 September 2014 November 2014 January 2015 March 2015 Source: Thomson Reuters Datastream. 2 ‘Economic Survey of the United Kingdom 2015’, Organisation for Economic Co‐operation and Development (OECD), February 2015. 3 Remarks by Angel Gurria at the press conference for the ‘Economic Survey of the United Kingdom 2015’, OECD, February 2015. 4 Governor of the Bank of England, oral evidence to the Treasury Committee, Bank of England Inflation Report hearings, 24 February 2015. 5 Thomson Reuters Datastream. 6 ‘Economic and fiscal outlook’, Office for Budget Responsibility (OBR), March 2015. 10 Budget 2015
The OBR expects the decline in the oil price “is likely to affect economic activity in a number of ways: boosting real household incomes and thereby consumer spending and, to a lesser extent, encouraging business investment, but weighing on North Sea production and investment”. 7 The OBR expects the fall in the oil price since Autumn Statement 2014 to increase GDP growth by around 0.4 percentage points across 2015 and 2016, more than offsetting the effect on net trade of a further deterioration in the outlook for the UK’s export markets. At the global level, lower oil prices can support aggregate demand if oil consumers increase their spending by more than oil producers cut theirs. In the February 2015 ‘Inflation Report’ the Bank of England estimate that “the fall in oil prices since mid-2014 could boost the level of UK-weighted world GDP by around 0.8%, offsetting some of the negative news in world demand since the summer, and helping to support UK exports”. 8 There is a considerable margin of uncertainty around the global impact. Low inflation driven by the fall in global oil and food prices is good news for households. At Budget 2014, the OBR forecast that UK CPI inflation in 2015 would be 2.0%. The OBR’s revised forecast for CPI inflation in 2015 is 0.2%. Lower inflation means that on average the cost of running a household in 2015 will be £450 cheaper than was forecast a year ago. 9 The fall in oil prices has supported household budgets. Due to petrol pump prices falling by 19p per litre since March 2014, the cost of filling up a tank for the typical motorist has fallen by £11 since Budget 2014. 10 The government has made very clear that it will watch industry to ensure that savings from the fall in oil prices are being passed through to consumers. Employment, earnings and productivity Employment 1.7 The UK labour market has continued to strengthen. At the end of 2014 employment was at its highest level ever at 30.9 million, more than 1 million above its pre-crisis peak, and up 1.85 million since the current government came into power. The employment rate was 73.2% for the 3 months to December 2014, the joint highest level since records began. In 2014 the annual increase in the employment level and the annual decrease in the unemployment level were the largest since 1988. At the end of 2014 youth unemployment had fallen by a fifth compared to a year earlier. 1.8 Employment has increased faster in the UK since Q1 2010 than in any other country in the G7, as shown in Chart 1.2. 11 Over the last year the UK government has come closer to achieving its full employment ambition to have the highest employment rate in the G7. The internationally comparable employment rate for the UK was 72.0% in Q3 2014, the fourth highest in the G7. 12 7 ‘Economic and fiscal outlook’, OBR, March 2015. 8 ‘Inflation Report’, Bank of England, February 2015. 9 HM Treasury calculations based on March 2014 and March 2015 OBR forecasts for the consumer expenditure deflator, March 2015 OBR forecasts for private consumption, ONS household statistics and Department for Communities and Local Government (DCLG) household projections. 10 ‘Weekly road fuel prices’, Department of Energy and Climate Change (DECC), as of 10 March 2015. 11 ‘Short-Term Labour Market Statistics: Employed Population’, OECD, March 2015. 12 ‘Short-Term Labour Market Statistics: Employed Population’, OECD, March 2015. Budget 2015 11
Page 1 and 2: BUDGET 2015 HC 1093 March 2015
Page 3 and 4: © Crown copyright 2015 This public
Page 5 and 6: Budget 2015
Page 7 and 8: The UK economy and public finances
Page 9 and 10: •• supporting manufacturers by
Page 11 and 12: Chart 1 presents public spending by
Page 13: 1 Budget Report The UK economy and
Page 17 and 18: as inflation. 15 The OBR forecasts
Page 19 and 20: Chart 1.4: Current account 4 % of G
Page 21 and 22: 1.31 The OBR has revised up its for
Page 23 and 24: 1.45 Since Autumn Statement 2014, t
Page 25 and 26: Chart 1.5: Calculated impact of fin
Page 27 and 28: Table 1.4: Comparison of key fiscal
Page 29 and 30: Performance against EU targets 1.64
Page 31 and 32: holding TME flat in real terms in 2
Page 33 and 34: 1.83 Police forces are already deli
Page 35 and 36: Table 1.5: Spending within the welf
Page 37 and 38: system. The government has granted
Page 39 and 40: Figure 1: Implementation of the gov
Page 41 and 42: The long-term impact of the governm
Page 43 and 44: Energy intensive industries 1.117 B
Page 45 and 46: oosting oil production in 2019 by 1
Page 47 and 48: partners and the Scottish and Welsh
Page 49 and 50: Figure 2: Investment across the Uni
Page 51 and 52: South West 1.166 Transport: The gov
Page 53 and 54: •• launching a review into how
Page 55 and 56: Creating a dynamic economy 1.192 Cr
Page 57 and 58: 1.204 The FinTech sector comprises
Page 59 and 60: Chart 1.11: Personal allowance: imp
Page 61 and 62: effective requirement to buy an ann
Page 63 and 64: Extending freedom and choice at ret
Page 65 and 66:
Avoidance 1.243 This government has
Page 67 and 68:
2 Budget policy decisions 2.1 Chapt
Page 69 and 70:
£ million Head 2015-16 2016-17 201
Page 71 and 72:
£ million Head 2015-16 2016-17 201
Page 73 and 74:
Table 2.4: Implied DEL 2016-17 2017
Page 75 and 76:
Financial transactions and continge
Page 77 and 78:
2.29 City Deals - Following the suc
Page 79 and 80:
2.51 Skills devolution to London -
Page 81 and 82:
2.71 Armed Forces Early Departure S
Page 83 and 84:
2.85 Making ISAs more flexible - In
Page 85 and 86:
Charities 2.104 Gift Aid Small Dona
Page 87 and 88:
2.117 Universal Credit waiting days
Page 89 and 90:
forward losses to 50% from 1 April
Page 91 and 92:
Transport taxes 2.157 Rural fuel re
Page 93 and 94:
2.182 Business Rates: local newspap
Page 95 and 96:
2.201 Maximising the yield from the
Page 97 and 98:
2.216 Payment Systems Regulator - T
Page 99 and 100:
Sharing economy 2.232 Sharing pilot
Page 101 and 102:
consumers in the next most expensiv
Page 103 and 104:
2.274 Regional strategies - Innovat
Page 105 and 106:
A Welfare cap A.1 The level of the
Page 107 and 108:
B Financing B.1 This annex sets out
Page 109 and 110:
National Savings and Investments B.
Page 111 and 112:
C OBR’s Economic and fiscal outlo
Page 113 and 114:
Table C.2: Determinants of the OBR
Page 115 and 116:
Table C.4: Total Managed Expenditur
Page 117 and 118:
Table C.6: Changes to the cyclicall
Page 119 and 120:
List of abbreviations AIIB AME APD
Page 121 and 122:
OBR OECD OGA ONS OTS P2P PAIF POTAS
Page 123 and 124:
LIST OF CHARTS Executive Summary 1
show all

1GJgFA7

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?