5. Conclusion


Confidence intervals provide a guide to the degree of uncertainty around forecasts. We have presented confidence intervals around key budget forecasts, which suggest that rather than focusing on precise point estimates, a more nuanced discussion would acknowledge that uncertainty is an unavoidable feature of forecasts, with confidence intervals spanning a wide range of outcomes. This is particularly true of the nominal macroeconomic and fiscal variables, for which uncertainty increases as the forecast horizon lengthens.

Reporting confidence intervals provides a way of improving the understanding of the uncertainty inherent in forecasting. Reporting confidence intervals complements existing approaches to convey uncertainty including the discussion of risks to the forecasts and sensitivity analysis provided in the Budget as well as analysis of ways to improve forecasting performance, such as that in the Treasury Forecasting Review.