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Chart 1.2: International comparison of employment 108 Employment (age 15 and over), level indexed to 100 at Q1 2010 106 104 102 100 98 96 2008 2009 2010 2011 2012 2013 2014 Canada France Germany Italy Japan US UK Source: Organisation for Economic Co-operation and Development. 1.9 The overall growth in employment predominantly reflects increases in the number of people employed in high and medium-skilled occupations. In the 4 years since Q1 2010 more than twothirds of the increase in employment has been in high-skilled occupations. 13 Since Q1 2010 over 70% of the increase in employment has come from full-time workers, including self-employed workers, and nearly 60% of the increase in employment has come from full-time employees. 1.10 Participation has also increased, with the working age participation rate at levels last seen in the early 1990s and 1.2 million more people in the workforce at the end of 2014 than when the current government came into power. The growth in the number of women joining the workforce has helped drive this increase. Since 2008, over 70% of the increase in working age participation has come from women. This has led to the gender gap in participation rates reaching a record low at the end of 2014. Older workers are also playing a greater role in the labour market, with the participation rate in 2014 for those aged over 50 at its highest since records began. Earnings 1.11 Earnings growth has been strengthening, with total pay up 2.1% in the 3 months to December 2014 compared to a year earlier. In the year to December 2014 real pay growth was 1.9%, marking the fourth month of positive real wage growth. The OBR forecasts real terms growth in average earnings for all years of the forecast. 14 1.12 Lower fuel and food prices are welcome news for households, boosting real household incomes and helping family budgets stretch further. Real household disposable income (RHDI) per capita is the most up to date and comprehensive measure of living standards, used by the OECD, the Office for National Statistics (ONS) and its use welcomed by the UK Statistics Authority, as it takes into account employment levels, the effects of tax and benefits, as well 13 High and medium-skilled occupations as defined in ‘Economic Review’, ONS, December 2014. 14 All forecasts refer to the OBR ‘Economic and fiscal outlook’, March 2015, unless otherwise stated. 12 Budget 2015
as inflation. 15 The OBR forecasts imply that in 2015 living standards, as measured by RHDI per capita, will be higher than in 2010 or any previous year and will continue to grow strongly every year for the rest of the forecast period. The OBR forecasts that in 2015 RHDI per capita will grow at its fastest rate for 14 years at 3.1%. This will mean that on average households will be £1,100 better off in 2015 than 2014 and around £900 better off in 2015 than in 2010. 16 The Institute for Fiscal Studies (IFS) have nowcast households below average income (HBAI) to 2014-15, and on current trends median income in 2015-16 is likely to be higher than in 2010-11. 17 1.13 GDP per capita is forecast to be over 5% higher in 2015 than in 2010. Chart 1.3 shows the projected path of GDP per capita and RHDI per capita. Chart 1.3: Different measures of living standards 120 RHDI per capita and GDP per capita, level indexed to 100 at 2010 115 110 105 100 95 90 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 RHDI per capita OBR forecast GDP per capita OBR forecast Source: Office for National Statistics, Office for Budget Responsibility. Productivity 1.14 Poor productivity growth has been a long-term issue affecting the UK economy. Since the financial crisis UK productivity performance has been weak. Factors related to the nature of the financial crisis are likely to be having a persistent impact on the level of productivity. 1.15 The latest data has been mixed and shows output per hour productivity grew by 0.6% and output per worker productivity grew by 0.4% in Q3 2014 on the previous quarter. Productivity in the public sector has been increasing steadily since the financial crisis. Between 2010 and 2012 public sector productivity increased by a total of 3.7%. 18 The OBR forecasts productivity growth picking up to 0.9% in 2015, 2.1% in 2016 and 2.5% in 2017. 1.16 The UK is not alone in having weak productivity growth recently and the relationship between pre and post-crisis productivity in the UK is qualitatively similar to that of other 15 The UK Statistics Authority (UKSA) recently welcomed “Greater use of the estimates of Household Disposable Income (a component of the ONS National Accounts) to give insight into household income at both the aggregate and individual level”. Monitoring Review 1/2015 – ‘The Coherence and Accessibility of Official Statistics on Income and Earnings’, UKSA, February 2015. 16 HM Treasury calculations based on March 2015 OBR forecasts for Real Household Disposable Income (RHDI), ONS household statistics and DCLG household projections. 17 ‘Living standards: recent trends and future challenges’, Institute for Fiscal Studies (IFS), March 2015. 18 ‘Public Service Productivity Estimates: Total Public Services, 2012’, ONS, February 2015. Budget 2015 13
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 and 14: 1 Budget Report The UK economy and
Page 15: The OBR expects the decline in the
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
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£ million Head 2015-16 2016-17 201
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£ million Head 2015-16 2016-17 201
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Table 2.4: Implied DEL 2016-17 2017
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Financial transactions and continge
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2.29 City Deals - Following the suc
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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
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forward losses to 50% from 1 April
Page 91 and 92:
Transport taxes 2.157 Rural fuel re
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2.182 Business Rates: local newspap
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2.201 Maximising the yield from the
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2.216 Payment Systems Regulator - T
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Sharing economy 2.232 Sharing pilot
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consumers in the next most expensiv
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2.274 Regional strategies - Innovat
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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.
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C OBR’s Economic and fiscal outlo
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Table C.2: Determinants of the OBR
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Table C.4: Total Managed Expenditur
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Table C.6: Changes to the cyclicall
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List of abbreviations AIIB AME APD
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OBR OECD OGA ONS OTS P2P PAIF POTAS
Page 123 and 124:
LIST OF CHARTS Executive Summary 1
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