We have been asked for some further planning assumptions to go with the original set. These are given below.

**Asset prices**

The optimistic assumption would be that Brexit does not happen or happens in a way that is not harmful so some of the correction is recovered from what had been priced in on that account. So say a loss of 10%. And the middle option would be 20%.

**Investment performance**

The most optimistic figure that has been canvassed is 3.5%, but this is surely too optimistic in the circumstances. Say 3%, with a middle figure of 2%.

**Cash**

The question here is really what the difference between inflation and interest rates will be. The BoE forecasts suggest a real interest rate of around -2%, as at present. To be more scientific, real interest rates are currently something like -1.75% (0.75% Bank Rate – 2.5% inflation). The BoE forecasts tend to imply a real interest rate of about -2%, but it would depend on how the rate was adjusted to counter inflation. Say -2.5%/-2%/-1.5% for pessimistic/middle/optimistic.

As for inflation itself, the optimistic forecast would be that MPC manages to hold inflation to say 2.5% over the period, giving overall inflation of 13%. So we take 22% as the middle point.

**CS Pension**

There seems to be no room for variation here.

**State Pension**

If one assumes 2.5 % inflation then the only room for growth even under the ‘triple lock’ would be if earnings rose faster than inflation. The latest ONS figures show essentially no real growth in earnings over the period from 2005 (!), so one cannot expect any real increase there either.

**Tax rates and allowances**

Hard to see any room for giveaways here!

> **60 concessions**

Too make things easy for ourselves, we assume that in the optimistic case these survive for the next 5 years, while in the middle case half of them do.

**Discussion**

The pessimistic scenario reflects a coherent view of unmediated Brexit plus asset price correction while the optimistic scenario also reflects a coherent (but unlikely) outcome where Brexit is rendered harmless. It is hard to give such a definite interpretation to the middle scenario and as such it should be treated with caution.

The treatment of tax and pension changes as proxied by >60 concessions is very likely insufficient–at the very least, one could consider allowances as being constant in nominal terms, thus reducing in real terms.

The present treatment also implicitly assumes that things remain as they are for the remainder of 2018-19, which is certainly open to challenge.