Government should allow OBR economic forecast to mini-budget, MPs say

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

The Chancellor is set to announce tens of billions of pounds in both spending increases and tax cuts on Friday morning.

But the government does not allow the OBR to make the forecasts it usually publishes together with a budget.

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Resolution Foundation chief executive Torsten Bell has criticized the government’s decision to tie the hands of the OBR (Jonathan Brady/PA)

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Resolution Foundation chief executive Torsten Bell has criticized the government’s decision to tie the hands of the OBR (Jonathan Brady/PA)

Torsten Bell, the chief executive of the Resolution Foundation, said it was “almost inconceivable that no reasonable forecast from the OBR would show an increase in debt throughout the forecast period“.

Speaking to MPs on the Treasury Select Committee, he also criticized the government’s decision to tie the hands of the OBR.

“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 to say that the OBR “was always wrong”.

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

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

” Is everything alright ? No. When we disagree with them, they say so…that’s what good old-fashioned liberal debate entails.

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

The committee’s Conservative chairman, Mel Stride, said the data was “vital” to “reassure and reassure international markets and investors”.

The committee released Mr Kwarteng’s response on Thursday, in which he pledged to provide an update on the OBR’s forecast schedule on Friday.

In the letter, the Chancellor wrote: “In the early days of the new government, we have provided strong support to households and businesses and are moving quickly to present a growth plan to Parliament on Friday.

“We remain committed to two forecasts in this fiscal year, as required by legislation. I will provide an update on the OBR’s forecast schedule when I speak to the House on September 23.

The idea that this is going to suddenly spur this huge recovery in economic growth, I find hard to believe.Neil Shearing, Capital Economics

Meanwhile, Neil Shearing, the chief economist at Capital Economics, said National Insurance and corporation tax cuts, which are expected to feature in the budget, will not do much to grow the economy. .

“I think the framing of this was slightly skewed actually. We have come out of 15 years of extremely weak growth,” he told MPs.

“These tax cuts bring tax rates back to where they were 18 months ago when growth was really weak.

“So the idea that this is going to suddenly spur this huge recovery in economic growth, I find hard to believe.”