Government should allow OBR’s economic forecast on a mini-budget, MPs said


The government should not announce major tax cuts without an independent economic forecast from the Office for Budget Responsibility, the head of a major economic think tank warned.

The chancellor will announce tens of billions of pounds Friday morning, both for higher spending and tax cuts.

But the cabinet does not allow the OBR to make the forecasts it usually publishes alongside a budget.

Torsten Bell, the chief executive of the Resolution Foundation, said it is “almost inconceivable that a reasonable forecast from the OBR would not show debt rising over the forecast period.”

In a speech to MPs from the Treasury Select Committee, he also criticized the government’s decision to tie the hands of the OBR.

See also  Shoppers hit record 10.6% food inflation – BRC-NielsenIQ

“It’s not a good idea to announce big, permanent tax cuts without an underlying economic forecast,” he said.

He also said that Jacob Rees-Mogg was wrong in saying that the OBR “has always been wrong”.

Forecasts are always uncertain because not everything can be predicted, he said.

“The country is making better economic policy decisions because (the OBR) exists,” Mr Bell told MPs.

“Is everything going to be okay? No. If we disagree with them, they will say so… that’s what good old-fashioned liberal debate is about.”

Earlier this week, the Commons Treasury Committee wrote to Mr. Kwarteng, urging his tax event to be accompanied by OBR data.

See also  'Record numbers of nurses leaving the NHS'

The committee’s conservative chair, Mel Stride, said the data is “vital” in providing “reassurance and confidence to international markets and investors.”

The committee published Mr. Kwarteng’s response on Thursday, promising to provide an update on the timetable for an OBR forecast on Friday.

In the letter, the chancellor wrote: “In the early days of the new government, we have provided significant support to households and businesses and are acting quickly to present a growth plan to parliament on Friday.

“We remain committed to two forecasts in this fiscal year, as required by law. During my statement to the House on September 23, I will provide an update on the timetable for an OBR forecast.”

Meanwhile, Neil Shearing, chief economist at Capital Economics, said the social insurance and corporate tax cuts expected to come into the budget won’t help the economy grow much.

“I think the framing of this is actually a bit skewed. We are behind 15 years of cripplingly low growth,” he told MPs.

“These tax cuts are bringing tax rates back to levels they were 18 months ago when growth was very low.

“So the idea that it’s suddenly going to spur this massive uptick in economic growth is hard to believe.”



Please enter your comment!
Please enter your name here