Update the economic assumptions to the October 2026 EFO

changelog.d/obr-october-2026-efo-2711.changed.md

@@ -0,0 +1 @@
+Update the economic assumptions to the OBR's October 2026 Economic and fiscal outlook, including its revised 2025 outturn and its new 2031 forecast, with a smooth join to the long-run paths from 2032. Population to 2031-32 is the OBR's October forecast, read from its economy tables; it grows more slowly than the March forecast, so household weights are about 0.7% lower by 2030-31. Bank Rate, which caps Plan 1 and Plan 4 student loan interest, is the calendar-year average from the October economy Table 1.9 in every year, so 2026-2031 follow the OBR's market path. The regulated rail fare indices rise by July 2026 RPI plus 1 point in 2027 and by the October RPI forecast plus 1 point to 2031, which raises rail_subsidy_spending from 2028. Households' financial assets follow October Table 1.11 to 2031; the October tables revise 2020 onwards down, so the property wealth, corporate wealth and land value totals they grow are about 10% lower in 2026, which moves land value tax and wealth tax reform results.

docs/book/assumptions/growthfactors.md

@@ -1,7 +1,7 @@
 # Economic assumptions
 
 ```{note}
-We project economic variables using year-over-year growth rates stored in `parameters/gov/economic_assumptions/yoy_growth.yaml`. We generate index values from these rates to update household variables. We source all values from the OBR's long-term economic determinants and Economic and Fiscal Outlook ([March 2025](https://obr.uk/efo/economic-and-fiscal-outlook-march-2025/)) unless we specify otherwise. The long-term determinants provide extended forecasts beyond the standard forecast horizon.
+We project economic variables using year-over-year growth rates stored in `parameters/gov/economic_assumptions/yoy_growth.yaml`. We generate index values from these rates to update household variables. We source all values from the OBR's long-term economic determinants and Economic and Fiscal Outlook ([October 2026](https://obr.uk/efo/economic-and-fiscal-outlook-october-2026/)) unless we specify otherwise. The long-term determinants provide extended forecasts beyond the standard forecast horizon.
 ```
 
 ## Consumer price index
@@ -10,9 +10,9 @@ We project economic variables using year-over-year growth rates stored in `param
 We use the OBR's CPI projections to drive most benefit and consumption variables.
 ```
 
-| Fiscal year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 |
-|-------------|------|------|------|------|------|------|------|------|
-| Growth rate | 10.0% | 5.7% | 2.3% | 3.2% | 1.9% | 2.0% | 2.0% | 2.0% |
+| Year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 |
+|-------------|------|------|------|------|------|------|------|------|------|------|
+| Growth rate | 9.1% | 7.3% | 2.5% | 3.4% | 3.1% | 3.4% | 2.1% | 2.1% | 2.0% | 2.0% |
 
 We apply CPI to these variables:
 - All reported benefits– `carers_allowance_reported`, `child_benefit_reported`, `child_tax_credit_reported`, `esa_contrib_reported`, `esa_income_reported`, `housing_benefit_reported`, `iidb_reported`, `incapacity_benefit_reported`, `income_support_reported`, `jsa_contrib_reported`, `jsa_income_reported`, `maternity_allowance_reported`, `pension_credit_reported`, `sda_reported`, `state_pension_reported`, `universal_credit_reported`, `winter_fuel_allowance_reported`, `working_tax_credit_reported`
@@ -32,9 +32,9 @@ column missing and household situations retain CPI uprating. See the
 
 We use HMRC road-fuel clearances and OBR-implied forecast volumes for petrol and diesel spending, because PolicyEngine converts these spending fields into litres by dividing by pump prices.
 
-| Fiscal year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 |
-|-------------|------|------|------|------|------|------|------|------|
-| Growth rate | 6.3% | -0.6% | -0.1% | -2.0% | -1.4% | -2.4% | -2.7% | -3.7% |
+| Fiscal year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 |
+|-------------|------|------|------|------|------|------|------|------|------|------|
+| Growth rate | 6.3% | -0.6% | -0.1% | -1.3% | -2.3% | -3.1% | -3.1% | -4.0% | -5.4% | -6.5% |
 
 We apply this to: `diesel_spending`, `petrol_spending`
 
@@ -58,9 +58,9 @@ rates after their last published value.
 We apply the OBR's wage growth forecasts to employment-related variables.
 ```
 
-| Fiscal year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 |
-|-------------|------|------|------|------|------|------|------|------|
-| Growth rate | 6.4% | 6.9% | 4.7% | 3.7% | 2.2% | 2.1% | 2.3% | 2.5% |
+| Year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 |
+|-------------|------|------|------|------|------|------|------|------|------|------|
+| Growth rate | 6.1% | 6.2% | 5.1% | 4.1% | 3.7% | 3.0% | 2.1% | 2.3% | 2.5% | 2.6% |
 
 We use average earnings for these variables: `employee_pension_contributions`, `employer_pension_contributions`, `employment_income`, `employment_income_before_lsr`, `personal_pension_contributions`, `student_loan_repayments`
 
@@ -91,78 +91,78 @@ write-off approximations are unchanged.
 
 We lag earnings growth by one year and use that to uprate housing service charges (including ground rent).
 
-| Fiscal year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 |
-|-------------|------|------|------|------|------|------|------|------|
-| Growth rate | 5.9% | 6.4% | 6.9% | 4.7% | 3.7% | 2.2% | 2.1% | 2.3% |
+| Year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 |
+|-------------|------|------|------|------|------|------|------|------|------|------|
+| Growth rate | 5.9% | 6.1% | 6.2% | 5.1% | 4.1% | 3.7% | 3.0% | 2.1% | 2.3% | 2.5% |
 
 ## Per capita GDP
 
-We derive these rates as calendar-year nominal GDP growth from the OBR's March 2026 EFO divided by population growth: (1 + GDP growth) / (1 + population growth) − 1.
+We derive these rates as calendar-year nominal GDP growth from the OBR's October 2026 EFO divided by population growth: (1 + GDP growth) / (1 + population growth) − 1.
 
-| Year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 |
-|-------------|------|------|------|------|------|------|------|------|
-| Growth rate | 10.0% | 5.2% | 3.9% | 4.7% | 2.9% | 3.3% | 3.2% | 3.1% |
+| Year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 |
+|-------------|------|------|------|------|------|------|------|------|------|------|
+| Growth rate | 10.0% | 5.2% | 4.0% | 4.6% | 4.0% | 3.1% | 3.4% | 3.6% | 3.4% | 3.3% |
 
 We use per capita GDP for these variables: `benunit_reported_capital`, `capital_gains`, `capital_gains_badr`, `capital_gains_before_response`, `capital_gains_carried_interest`, `capital_gains_residential_property`, `cash_isa`, `corporate_wealth`, `directly_held_shares`, `dividend_income`, `gross_financial_wealth`, `household_lifetime_isa_balance`, `lifetime_isa_balance`, `lump_sum_income`, `main_residence_value`, `maintenance_income`, `miscellaneous_income`, `mortgage_capital_repayment`, `net_financial_wealth`, `non_residential_property_value`, `other_investment_income`, `other_residential_property_value`, `owned_land`, `pension_credit_reported_capital`, `pension_income`, `private_pension_wealth`, `private_transfer_income`, `property_income`, `property_rental_income`, `savings`, `savings_interest_income`, `spousal_maintenance_income`, `stocks_and_shares_isa`, `sublet_income`, `uc_reported_capital`, `unit_and_investment_trusts`
 
 ## Council tax
 
-We project each country's council tax receipts, net of council tax reduction, with the OBR's forecasts (March 2026 EFO, Expenditure Table 4.1) from 2025-26, and official outturns before then: MHCLG's council tax requirement for England, the Scottish Government's net amount billed and the Welsh Government's net collectable debit.
+We project each country's council tax receipts, net of council tax reduction, with the OBR's figures (October 2026 EFO, Expenditure Table 5.1) from 2025-26, and official outturns before then: MHCLG's council tax requirement for England, the Scottish Government's net amount billed and the Welsh Government's net collectable debit.
 
-| Fiscal year | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 |
-|-------------|------|------|------|------|------|------|------|------|
-| England | 6.6% | 6.5% | 7.0% | 5.5% | 6.1% | 6.2% | 5.6% | 5.5% |
-| Scotland | 6.4% | 2.4% | 3.8% | 3.8% | 3.8% | 3.8% | 3.8% | 3.8% |
-| Wales | 7.1% | 9.9% | 7.7% | 7.4% | 7.4% | 7.4% | 7.4% | 7.4% |
+| Fiscal year | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 |
+|-------------|------|------|------|------|------|------|------|------|------|
+| England | 6.6% | 6.5% | 7.0% | 6.1% | 5.2% | 5.6% | 5.5% | 5.4% | 5.3% |
+| Scotland | 6.4% | 2.4% | 3.9% | 3.9% | 3.9% | 3.9% | 3.9% | 3.9% | 3.9% |
+| Wales | 7.1% | 9.9% | 7.7% | 7.4% | 7.4% | 7.4% | 7.4% | 7.4% | 7.4% |
 
 Receipts are the Band D level times the tax base, the number of Band D equivalent dwellings, so they grow with the number of homes as well as with bills. Household weights grow with population, so each household's `council_tax` grows by its country's receipts growth divided by population growth: (1 + receipts growth) / (1 + population growth) − 1. Each country's weighted total then grows with its receipts. Northern Ireland has no council tax (it has domestic rates), so any `council_tax` a dataset gives its households is held flat.
 
 ## Mortgage interest
 
 We use the OBR's mortgage interest rate index growth rates.
 
-| Fiscal year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 |
-|-------------|------|------|------|------|------|------|------|------|
-| Growth rate | 26.2% | 48.5% | 22.1% | 13.6% | 12.6% | 8.2% | 4.2% | 4.7% |
+| Year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 |
+|-------------|------|------|------|------|------|------|------|------|------|------|
+| Growth rate | 14.6% | 52.2% | 27.3% | 9.5% | 6.2% | 11.6% | 6.7% | 4.8% | 5.5% | 5.5% |
 
 We apply this to: `mortgage_interest_repayment`, `property_finance_costs`, `property_finance_costs_brought_forward`
 
 ## Private pension index
 
 We use RPI year-on-year change from the previous year, capped at 5%.
 
-| Fiscal year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 |
-|-------------|------|------|------|------|------|------|------|------|
-| Growth rate | 5.0% | 5.0% | 5.0% | 4.7% | 3.7% | 2.2% | 2.1% | 2.3% |
+| Year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 |
+|-------------|------|------|------|------|------|------|------|------|------|------|
+| Growth rate | 5.0% | 5.0% | 5.0% | 3.6% | 4.1% | 3.6% | 4.3% | 3.0% | 3.0% | 2.3% |
 
 We apply this to: `private_pension_income`
 
 ## Rent
 
 We use the OBR's rental growth projections.
 
-| Fiscal year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 |
-|-------------|------|------|------|------|------|------|------|------|
-| Growth rate | 4.0% | 6.3% | 7.4% | 5.7% | 3.6% | 2.7% | 2.3% | 2.4% |
+| Year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 |
+|-------------|------|------|------|------|------|------|------|------|------|------|
+| Growth rate | 3.5% | 5.8% | 7.2% | 5.4% | 3.6% | 3.2% | 2.7% | 2.6% | 2.5% | 2.8% |
 
 We apply this to: `rent`
 
 ## Per capita mixed income
 
-We derive these rates as calendar-year mixed income growth from the OBR's March 2026 EFO (Table 1.12) divided by population growth, in the same way.
+We derive these rates as calendar-year mixed income growth from the OBR's October 2026 EFO (Table 1.12) divided by population growth, in the same way.
 
-| Year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 |
-|-------------|------|------|------|------|------|------|------|------|
-| Growth rate | 2.9% | -0.6% | 2.7% | 1.1% | 3.1% | 3.8% | 3.7% | 3.6% |
+| Year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 |
+|-------------|------|------|------|------|------|------|------|------|------|------|
+| Growth rate | 2.8% | -0.6% | 2.8% | 0.5% | 3.0% | 3.2% | 3.5% | 3.8% | 4.0% | 4.0% |
 
 We apply this to: `self_employment_income`
 
 ## Population
 
-We use the population growth in the OBR's [long-term economic determinants for the March 2026 EFO](https://obr.uk/supplementary-forecast-information-release-long-term-economic-determinants-march-2026/): the OBR's forecast to 2030-31, then the principal projection of the [ONS 2024-based national population projections](https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections/bulletins/nationalpopulationprojections/2024based). 2021-22 and 2022-23 are the same OBR series, read from the March 2026 EFO economy tables.
+We use the OBR's October 2026 population forecast to 2031-32, read from its economy tables (Table 1.1 real GDP over Table 1.5 real GDP per person, at Q2), and after that the population growth in the OBR's [long-term economic determinants for the March 2026 EFO](https://obr.uk/supplementary-forecast-information-release-long-term-economic-determinants-march-2026/), which follows the principal projection of the [ONS 2024-based national population projections](https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections/bulletins/nationalpopulationprojections/2024based). On the March 2026 EFO the same reading of the tables reproduces the determinants' forecast years, so the October determinants, once published, should change only the later years.
 
-| Fiscal year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 |
-|-------------|------|------|------|------|------|------|------|------|
-| Growth rate | 1.0% | 1.3% | 1.1% | 0.3% | 0.4% | 0.3% | 0.3% | 0.3% |
+| Fiscal year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 |
+|-------------|------|------|------|------|------|------|------|------|------|------|
+| Growth rate | 1.1% | 1.3% | 1.0% | 0.3% | 0.2% | 0.1% | 0.2% | 0.2% | 0.2% | 0.2% |
 
 We apply this to: `household_weight`

docs/book/assumptions/water-bills.md

@@ -25,7 +25,7 @@ Ofwat's [PR24 final determinations](https://www.ofwat.gov.uk/wp-content/uploads/
 
 1. Real growth already realised: the published 2025-26 and 2026-27 nominal increases less CPIH, 1.27 / 1.0327 × 1.054 / 1.0388 = 1.2478.
 2. Real growth left: 1.3568 / 1.2478 = 1.0874, spread evenly over three years, 2.83% a year.
-3. Inflation added back from `yoy_growth.obr.cpih`. Ofwat indexes bills to CPIH in the November before the charging year, so charging year t takes calendar year t-1: 1.0283 × 1.0255 = 5.5% for 2027-28, × 1.0211 = 5.0% for 2028-29, × 1.0204 = 4.9% for 2029-30.
+3. Inflation added back from `yoy_growth.obr.cpih` (the OBR's October 2026 forecast). Ofwat indexes bills to CPIH in the November before the charging year, so charging year t takes calendar year t-1: 1.0283 × 1.0324 = 6.2% for 2027-28, × 1.0330 = 6.2% for 2028-29, × 1.0214 = 5.0% for 2029-30.
 
 ```{note}
 Open assumptions:

docs/book/programs/gov/dwp/state-pension.md

@@ -250,9 +250,9 @@ growth in the matching OBR series (`yoy_growth.obr.consumer_price_index` or
 statutory-basis forecast minus the calendar-year growth stored in
 `yoy_growth.yaml`, so that in the baseline the input equals the OBR's figure:
 
-- September CPI: the OBR's September CPI forecast (receipts Table 3.19, the
-  CPI used to uprate tax thresholds), or Q3 CPI (economy Table 1.7) in years
-  that table does not cover;
+- September CPI: the OBR's September CPI forecast (receipts Table 4.19 in
+  the October 2026 EFO, the CPI used to uprate tax thresholds), or Q3 CPI
+  (economy Table 1.7) in years that table does not cover;
 - May-July earnings: Q2 average earnings growth (economy Table 1.6). The
   OBR does not forecast the ONS AWE series; its measure is wages and
   salaries per employee, and Q2 is the quarter nearest May to July.
@@ -263,8 +263,11 @@ minimum guarantee, with a zero floor on earnings growth. See
 [Pension Credit uprating](./pension-credit.ipynb#uprating) for its Savings Credit
 and pension-age Housing Benefit projections and reform behaviour.
 
-After the EFO horizon the gap is zero, so the inputs follow calendar-year
-growth. Smooth forecasts pay the higher of earnings, CPI and 2.5% each year,
+With the October 2026 EFO the baseline rises are 3.9% in April 2027 (the
+published May-July 2026 earnings), 3.4% in April 2028 (September 2027 CPI),
+2.5% in April 2029 to 2031 and 2.6% in April 2032, as in the OBR's triple
+lock row (EFO Table A.3). After the EFO horizon the gap is zero, so the
+inputs follow calendar-year growth. Smooth forecasts pay the higher of earnings, CPI and 2.5% each year,
 so the baseline has none of the extra cost the triple lock builds up when
 September CPI and May-July earnings take turns to spike; the OBR's long-run
 projections add 0.56 percentage points a year over earnings for it (Fiscal

docs/engineering/bus-fares.md

@@ -202,7 +202,7 @@ share of single tickets and its mean uncapped fare at FY2024–25 prices:
 |---|---:|---:|
 | `LOW`, at or below £2 | 0.56 | £1.70 |
 | `MIDDLE`, above £2 and up to £3 | 0.31 | £2.21 |
-| `HIGH`, above £3 | 0.13 | £3.96 |
+| `HIGH`, above £3 | 0.13 | £3.95 |
 
 The fares rise with the OBR CPI after FY2024–25 and the shares stay, so a fixed
 cap saves more as fares rise. The model caps each band's mean fare under both
@@ -214,22 +214,24 @@ mean needs more bands.
 `scripts/fit_bus_cap_savings.py` fits the table by least squares to the facts
 below, each scaled by its tolerance. It searches shares in steps of one point
 and fares in steps of one penny, keeps each band's mean at least 10% above its
-lower edge, and sets the low band's fare so all singles average £2.15:
+lower edge, and sets the low band's fare so all singles average £2.15. The
+last column is each fact under the fitted table, on the OBR's October 2026 CPI
+path:
 
 | Fact | Source | Target | Table gives |
 |---|---|---:|---:|
-| A full year at £2, 2023–24 | Fare cap support, DfT BUS05bi | £278.95m ± 10% | £282.8m |
+| A full year at £2, 2023–24 | Fare cap support, DfT BUS05bi | £278.95m ± 10% | £281.5m |
 | Part of the December 2024 to March 2025 index step outside London due to the £3 cap | BUS0415a: +11.0%; neighbouring quarters 0.1% to 2.3% | 10% ± 1 point of the yield | 9.8% |
-| The £3 cap in 2025 | ["over £150 million"](https://www.gov.uk/government/speeches/national-bus-fare-cap) | £150m ± 20% | £144.2m |
-| The £2 cap in 2027, against no cap | ["£400 million"](https://www.gov.uk/government/speeches/2-bus-fares-from-january-2027) | £400m ± 20% | £420.2m |
+| The £3 cap in 2025 | ["over £150 million"](https://www.gov.uk/government/speeches/national-bus-fare-cap) | £150m ± 20% | £142.7m |
+| The £2 cap in 2027, against no cap | ["£400 million"](https://www.gov.uk/government/speeches/2-bus-fares-from-january-2027) | £400m ± 20% | £447.1m |
 | Mean pre-cap price of single tickets | [DfT evaluation](https://www.gov.uk/government/publications/evaluation-of-the-2-bus-fare-cap), Table 6 | £2.15 ± £0.10 | £2.15 |
 | Share of single tickets above £2 | Table 6: £0.32 / (£2.73 − £2.00) | 0.44 ± 0.05 | 0.44 |
-| Their mean pre-cap price | Table 6 | £2.73 ± £0.10 | £2.73 |
-| 2024–25: £2 for 270 days, then £3 | Fare cap support, DfT BUS05bi | £515.69m, not fitted | £272.7m |
+| Their mean pre-cap price | Table 6 | £2.73 ± £0.10 | £2.72 |
+| 2024–25: £2 for 270 days, then £3 | Fare cap support, DfT BUS05bi | £515.69m, not fitted | £271.4m |
 
 The £400 million is read as £2 against no cap: the £3 scheme is funded only to
 December 2026, and the £2 scheme replaces it. Read as £2 against a continued
-£3 cap, the table gives £252.5m, 37% below. The script prints both.
+£3 cap, the table gives £268.7m, 33% below. The script prints both.
 
 The 2024–25 grant, for the benchmark year itself, is reported and not fitted;
 the table puts it at about half. Grant per priced boarding rose 77.5% on
@@ -253,7 +255,7 @@ cap's first ten months paid £210m against £245m planned. The table is a fitted
 central estimate, not an observed fare distribution.
 
 At FY2025–26 prices the table saves £0.36 per single ticket for a full year at
-£2 against no cap, and £0.14 at £3: about £0.37bn and £0.14bn a year at
+£2 against no cap, and £0.14 at £3: about £0.36bn and £0.14bn a year at
 2024–25 boardings.
 
 A dataset or calculator can supply `local_bus_uncapped_single_fare` for each