47881_Budget_2015_Web_Accessible

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Chart 1.2: International comparison of employment108Employment (age 15 and over), level indexed to 100 at Q1 201010610410210098962008200920102011201220132014Canada France Germany ItalyJapan USUKSource: Organisation for Economic Co-operation and Development.1.9 The overall growth in employment predominantly reflects increases in the number of peopleemployed in high and medium-skilled occupations. In the 4 years since Q1 2010 more than twothirdsof the increase in employment has been in high-skilled occupations. 13 Since Q1 2010 over70% of the increase in employment has come from full-time workers, including self-employedworkers, 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 lastseen in the early 1990s and 1.2 million more people in the workforce at the end of 2014 thanwhen the current government came into power. The growth in the number of women joiningthe workforce has helped drive this increase. Since 2008, over 70% of the increase in workingage participation has come from women. This has led to the gender gap in participation ratesreaching a record low at the end of 2014. Older workers are also playing a greater role in thelabour market, with the participation rate in 2014 for those aged over 50 at its highest sincerecords began.Earnings1.11 Earnings growth has been strengthening, with total pay up 2.1% in the 3 months toDecember 2014 compared to a year earlier. In the year to December 2014 real pay growth was1.9%, marking the fourth month of positive real wage growth. The OBR forecasts real termsgrowth in average earnings for all years of the forecast. 141.12 Lower fuel and food prices are welcome news for households, boosting real householdincomes 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 bythe OECD, the Office for National Statistics (ONS) and its use welcomed by the UK StatisticsAuthority, as it takes into account employment levels, the effects of tax and benefits, as well13High and medium-skilled occupations as defined in ‘Economic Review’, ONS, December 2014.14All 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 percapita, will be higher than in 2010 or any previous year and will continue to grow strongly everyyear for the rest of the forecast period. The OBR forecasts that in 2015 RHDI per capita will growat its fastest rate for 14 years at 3.1%. This will mean that on average households will be £1,100better off in 2015 than 2014 and around £900 better off in 2015 than in 2010. 16 The Institutefor Fiscal Studies (IFS) have nowcast households below average income (HBAI) to 2014-15, andon current trends median income in 2015-16 is likely to be higher than in 2010-11. 171.13 GDP per capita is forecast to be over 5% higher in 2015 than in 2010. Chart 1.3 showsthe projected path of GDP per capita and RHDI per capita.Chart 1.3: Different measures of living standards120RHDI per capita and GDP per capita, level indexed to 100 at 201011511010510095902010201120122013201420152016201720182019RHDI per capitaOBR forecast GDP per capita OBR forecastSource: Office for National Statistics, Office for Budget Responsibility.Productivity1.14 Poor productivity growth has been a long-term issue affecting the UK economy. Since thefinancial crisis UK productivity performance has been weak. Factors related to the nature of thefinancial 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% andoutput per worker productivity grew by 0.4% in Q3 2014 on the previous quarter. Productivity inthe public sector has been increasing steadily since the financial crisis. Between 2010 and 2012public sector productivity increased by a total of 3.7%. 18 The OBR forecasts productivity growthpicking 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 relationshipbetween pre and post-crisis productivity in the UK is qualitatively similar to that of other15The UK Statistics Authority (UKSA) recently welcomed “Greater use of the estimates of Household DisposableIncome (a component of the ONS National Accounts) to give insight into household income at both the aggregateand individual level”. Monitoring Review 1/2015 – ‘The Coherence and Accessibility of Official Statistics on Incomeand Earnings’, UKSA, February 2015.16HM Treasury calculations based on March 2015 OBR forecasts for Real Household Disposable Income (RHDI), ONShousehold 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 201513
Page 1 and 2: BUDGET 2015HC 1093March 2015
Page 3: © Crown copyright 2015This publica
Page 6 and 7: Executive SummaryWhen this Parliame
Page 8 and 9: Public sector net debt is forecast
Page 10 and 11: Chapter 2 sets out all measures ann
Page 12 and 13: Budget Report
Page 14 and 15: monetary policy and measures to sup
Page 18 and 19: developed countries. 19 The recent
Page 20 and 21: 1.27 The UK economy faces a number
Page 22 and 23: 1.39 Inflation fell markedly to 0.5
Page 24 and 25: Financial sector and other asset sa
Page 26 and 27: Fiscal forecast1.57 As set out in T
Page 28 and 29: Chart 1.6: Consolidation in the cyc
Page 30 and 31: shocks to the economy, even though
Page 32 and 33: and focus their budgets on providin
Page 34 and 35: of options to integrate spending ar
Page 36 and 37: Devolution1.95 The government conti
Page 38 and 39: Growth1.103 The UK economy had the
Page 40 and 41: Supporting business through the tax
Page 42 and 43: a 21 st century economy. The terms
Page 44 and 45: 1.124 The broadband connection vouc
Page 46 and 47: country to get onto the property la
Page 48 and 49: network of high quality rail connec
Page 50 and 51: to support tourism in the North Eas
Page 52 and 53: South East1.174 Housing: Housing re
Page 54 and 55: 1.185 The government will also prov
Page 56 and 57: Infrastructure Investment Bank (AII
Page 58 and 59: Fairness1.205 The government’s lo
Page 60 and 61: National Minimum Wage1.213 As annou
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Page 64 and 65: 1.235 Young people can develop ment
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estrict travel and subsistence reli
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Table 2.1: Budget 2015 policy decis
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Table 2.2: Measures announced at Au
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Public SpendingTotal Managed Expend
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Table 2.5: Departmental Expenditure
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2.19 Integrating services for peopl
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Midlands2.40 High Speed Rail Invest
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International development2.63 Antim
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2.78 Social investment - The govern
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new rules to target avoidance throu
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••RAF Biggin Hill Chapel Memori
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materials incorporated in products
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2.147 Tobacco Duty rates - As annou
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Environment and energy taxes2.170 A
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2.191 Simplified expenses: legislat
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••strengthen the descriptions o
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2.226 Smart ATMs - The government w
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2.242 Promoting the use of task-sha
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2.264 Science grand challenge fundi
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2.286 Northern powerhouse trade mis
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102 Budget 2015
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Gilt issuance by maturity, type and
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Illustrative future gross financing
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Table C.1: Detailed summary of OBR
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Table C.3: Current Receipts: OBR fo
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Table C.5: OBR forecast of the head
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Table C.8: Changes to the OBR’s f
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EISEPSRCEREUFBCFCAFCERMFCOFITsFLSFP
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LIST OF TABLESExecutive Summary1 Su
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HM Treasury contactsThis document c
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