Forecasts and projections

Summary

Estimating the future size of the population and the potential demand for services is an essential part of policy making and planning decisions. This evidence base is provided through the production of projections and forecasts.

Projections take historic data and roll them forward to project what future trends would look like if past trends continued. While they may include some assumptions about how future trends relate to past behaviour, they do not take into account external factors, such as planned policy changes, that could impact future trends.

Forecasts, on the other hand, factor in planned or potential changes in policy levers that will impact future trends. As a result, most forecasts are not labelled as official statistics, and they can be harder to reproduce than projections.

Some of the most widely used projections and forecasts are:

• The Office for National Statistics’ (ONS) Population projections – projections of the future size and age structure of the population of the UK. As well as being an input into other projections, these data are used to plan the provision of services such as transport, hospitals and schools.
• ONS’s Household projections – projections that provide an indication of the future number of households in England and its regions and local authorities. Used for planning in areas such as housing and social care.
• The Department for Education’s National Pupil Projections – projections of the number of pupils in schools in England by type of school and age. Used to determine demand for education provision and class sizes.
• The Office for Budget Responsibility’s Economy forecast – economic forecasts of public finances to support policy making and the Chancellor’s Budget and the Autumn Statement.

It is reasonable for people to make statements that refer to forecasts and projections within them, but the nature of the data and any relevant context should be made clear.

Things to consider:

• If a statement is referring to future trends or levels in data, is it clear whether the data constitute a projection or a forecast?
• What assumptions, if any, underpin the projection or forecast? Does it assume a steady state?
• Consider the context of the statement. Are there any anomaly years that would affect how past behaviour is projected forward? Are there key policy changes coming up that would affect the likelihood of the statement remaining true?
• If data visualisation is used to accompany a statement, is it clear which part of the data series is observed data and which is projected or forecast?

What to look out for when hearing statements containing forecasts and projections:

• Statements that use the present or past tense to describe future data points, for example, claiming that “debt has fallen” based on a decrease in forecasted debt levels.
• Claims that are made in an abbreviated form and exclude key assumptions that may affect the accuracy of the claim.
• No or ineffective communication of uncertainty. By their nature, projections and forecasts are subject to uncertainty as they can’t be certain on future changes in demographic behaviour or wider world events.

Wider support

The Institute for Fiscal Studies (IFS) is an independent economics research institute. The IFS publishes its own analysis and forecasts on a range of economic and fiscal topics.

The Resolution Foundation is an independent think-tank focused on improving living standards for those on low to middle incomes. It publishes its own analysis and forecasts on economic and social policies.