Treasury accused of ‘muddying the waters’ on comprehensive economic forecast

The Treasury has been accused of avoiding scrutiny and ‘muddying the waters’ over whether or not it was possible to release a full economic forecast alongside its mini-budget last week.

The Treasury Committee wrote to Chancellor Kwasi Kwarteng yesterday (September 29) asking that a full economic forecast from the Office for Budget Responsibility (OBR), along with a full budget, be released by the end of next month .

The Treasury had previously pledged to complete a full forecast and budget by November 23.

In the letter, Treasury Committee Chairman Mel Stride said the OBR was prepared to provide meaningful guidance alongside the September 23 statement, if requested by the Treasury.

“No such request has been received. Instead, the waters appear to have been muddy,” he said.

Stride attributed this to “suggestions” that a forecast “could not be provided”, as there was not the usual ten week period available for the OBR to create the forecast.

“Our exchange of correspondence about the forecast only adds to the sense of avoidance of scrutiny,” Stride said.

He said he pressed Kwarteng and former chancellor Nadhim Zahawi, “long before” the September statement, to publish an OBR forecast alongside it.

In a letter to the Treasury Committee on August 26, the OBR said it had started preparing an economic and fiscal outlook in late July in case of an emergency budget in September.

“In summary, if the new chancellor asked us to produce a forecast on September 14 or 21, we would be able to do so to a standard that meets legislative requirements,” the OBR said in its letter.

The OBR warned, however, that if it produced a report by that date, it would not be as comprehensive as usual, given the accelerated schedule. Usually, the OBR has ten weeks to write this report.

A Treasury spokesperson said: ‘Last week the Chancellor presented the first stage of the Government’s growth plan, with further supply-side reforms to come in the coming weeks – including announcements on changes to the planning system, business regulations, child care, immigration, agricultural productivity and digital infrastructure.

“And the Chancellor has instructed the OBR to produce economic and fiscal forecasts which will be published on November 23. At the same time, it will present the government’s medium-term budgetary plan, which will be based on the commitment to reduce the debt as a proportion of GDP in the medium term.

FTAdviser understands Prime Minister Liz Truss and Kwarteng are meeting OBR Chairman Richard Hughes today to discuss the forecasting process and economic and fiscal developments since March.

No OBR forecast “the lack of confidence in the markets”

The Treasury Committee said yesterday that an earlier forecast and fiscal event was urgently needed given “the continued uncertainty in the markets”.

Stride told Kwarteng: “Your growth plan is one of the most significant fiscal interventions of modern times and one that has resulted in a variety of significant and concerning reactions in the markets.