The Office for Budget Responsibility (OBR), the independent fiscal watchdog, said it has been asked by Chancellor Kwasi Kwarteng to produce a first draft of its economic forecasts by 7 October.
The lack of an OBR report to accompany Mr Kwarteng’s mini-budget last Friday deeply rattled financial markets.
The BBC revealed last week that the Treasury refused to publish an OBR report which would show the impact that the chancellor’s massive tax and borrowing package would have on the UK economy and its finances.
A final report by the OBR is expected to be released on 23 November when Mr Kwarteng reveals his medium-term fiscal plan.
This should set out how the government intends to follow its own fiscal rules. The current fiscal rules state that debt should be falling as a share of the UK’s gross domestic product - which is all the goods and services that the country produces - by 2024-25.
The rules also dictate that by that same financial year, daily public spending should be balanced by revenues.
But it is possible that Mr Kwarteng could set out his own rules, changing those drawn up by his predecessor Rishi Sunak in November 2021.
KK will, surely, set his own rules … and they’re bound to be surrealistic …
Independent forecaster the Office for Budget Responsibility (OBR) has already provided a draft to Chancellor Kwasi Kwarteng, the BBC understands.
The draft forecast the OBR has provided does not include the impact of the energy bill help. It has offered to provide a forecast including this impact, but that has been rejected.
The fact the offer has not been taken up is raising some concerns about whether the government’s tax and spending policy is “flying blind”, given predictions that the UK is facing a lengthy recession.
MPs on the Treasury Select Committee wrote to the chancellor on Tuesday seeking assurance that an OBR forecast would be published.
“These forecasts are a vital indicator of the health of the nation’s finances, and provide reassurance and confidence to international markets and investors,” said the committee’s chairman, Mel Stride.
"There has been a deterioration in our economic outlook since the last OBR forecast in March. There have been significant fiscal interventions since then and we are told there will be further significant interventions including major permanent tax cuts to be announced on Friday.
“Under these circumstances, it is vital that an independent OBR forecast is provided.”
The OBR is obliged to produce economic forecasts twice a year, usually accompanying the Autumn Budget and Spring Statement.
On Friday, there will be no independent assessment about whether permanent tax cuts and some one-off spending increases are consistent with the government’s Budget rules.
The lack of OBR forecast also means it will not cast judgement on the impact of the new tax measures on growth - a key target for the government which wants to increase the trend rate of growth to 2.5%.
Presumably, the OBR is somewhat pessimistic regarding the effect of KK’s economic “policy” …
In an unusual move, Liz Truss and Chancellor Kwasi Kwarteng will meet the chairman of the Office of Budget Responsibility’s (OBR) to discuss the fallout after Friday’s mini-budget.
News of the meeting with OBR chairman Richard Hughes came as a new poll gave Labour a 33 percentage point lead over the Tories.
Government sources have dismissed suggestions the talks with the independent forecaster, announced late on Thursday and first reported by the Guardian, amounted to an “emergency meeting”.
It is understood the forecast process will be discussed, as well as economic and fiscal developments since March.
In the letter on Thursday, Conservative MP Mel Stride - who chairs the cross-party Treasury Select Committee said the lack of an OBR forecast had left some people with the impression the government was trying to avoid scrutiny.
He said the next forecast should be brought forward, and that the chancellor’s next planned financial statement on 23 November should also be moved forward “to as early a date as possible”, given “the continued uncertainty within markets”.
The intervention from the committee comes after the prime minister spoke to a number of BBC outlets this morning, which saw her insist the tax cuts outlined in the mini-budget were the “right plan”.
I doubt that the OBR will get LT to see sense or get any sense out of her - her programming does not permit deviation …
Budget watchdog team leave Downing Street after 45 minutes
Members of the Office for Budget Responsibility have just been spotted leaving No 11 Downing Street - the chancellor’s official residence - 45 minutes after they arrived.
They were meeting Prime Minister Liz Truss and Chancellor Kwasi Kwarteng to discuss the economic turmoil after last week’s mini-budget.
OBR chairman Richard Hughes, along with committee members Andy King and Professor David Miles, were seen leaving Downing Street at 10:33 - they arrived at about 09:45.
Short … and sweet …
(L-R) Chair of the OBR, Office For Budget Responsibility, Richard Hughes, Member of the Budget Responsibility Committee, Andy King and Prof. David Miles CBE, Member of the Budget Responsibility Committee leave Downing Street after a meeting with British Prime Minister Liz Truss and her Chancellor Kwasi Kwarteng on September 30, 2022 in London, England.
OBR to deliver initial forecast to chancellor next week
Following a meeting with prime minister Liz Truss and the chancellor Kwasi Kwarteng, the Office for Budget Responsibility (OBR) has confirmed it will deliver an initial forecast on 7 October.
A spokesperson for the OBR said:
[The forecast] will, as always, be based on our independent judgement about economic and fiscal prospects and the impact of the government’s policies. We discussed the economic and fiscal outlook, and the forecast we are preparing for the Chancellor’s medium-term fiscal plan. We will deliver the first iteration of that forecast to the chancellor on Friday, 7 October, and will set out the full timetable up to 23 November next week.
The announcement comes after a 48-minute emergency meeting at No 11 Downing Street this morning.
LT told the OBR she values their “scrutiny”, the Treasury said, but will not publish their fresh forecast before more economic plans are set out in November
Kwasi Kwarteng faced intense questioning from the BBC’s Nick Robinson on Radio 4’s Today programme this morning.
Pressure to forecast:
Kwasi Kwarteng defended the government’s decision to deliver the mini-budget without independent analysis from the Office for Budgetary Responsibility (OBR), claiming it would not have been able to produce a forecast in time.
He said the government was preparing a medium-term “fiscal plan” that will be delivered in the coming weeks: "We have to wait 51 days because that is when the OBR will be able to come up with their forecasts. I’m absolutely determined that we get everything aligned and that we do this in a usual way," he said.
BIB Surely that is a lie - the OBR have prepared forecasts and LT/KK have refused the offer:
Following a meeting with prime minister Liz Truss and the chancellor Kwasi Kwarteng, the Office for Budget Responsibility (OBR) has confirmed it will deliver an initial forecast on 7 October.
Liz Truss told the OBR she values their “scrutiny”, the Treasury said, but will not publish their fresh forecast before more economic plans are set out in November
