Here, we're comparing the initial expectation with the actual outcome after 15 years. The values shown according to start year (31 December) are “initial expectation” minus “actual outcome” (simple), with positive values implying an over-estimate. This matters hugely because just 1% pa is worth, say, 25% of a fully RPI-linked deferred liability. We think that is a hugely significant corporate financial distortion.

The expectations have all been based upon a period of 15 years, the approaches being based upon “Bank of England spot”, “Bank of England forward” and “long gilts”. The three possible pairs have been compared.

Over the period of 15 years from the end of 2009 until the end of 2024, all three measures ended up negative, not as close to one another as between 2008 and 2023. In absolute order, the values were minus 0.4% (gilts), minus 0.7% (forward) and minus 1.3% (spot). Over all periods of 15 year since 1985, on average, all three were very similar, namely forward and spot on 0.8% with gilts marginally lower at 0.7%). On variability, gilts (1.2%) was lower than either forward (1.5%) or spot (1.9%). That would suggest that gilts is actually best of class. However, that is principally due to very recent experience and we believe that there is still a bias.