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This excerpt discusses the role and evolution of the Office for Budget Responsibility (OBR) in the UK, particularly in the wake of the 2022 mini-Budget under Liz Truss and Kwasi Kwarteng, and the subsequent legislative changes designed to empower the OBR.
Key points include:
– The 2022 mini-Budget promised significant tax cuts but did not explain how these would be financed, causing turmoil in financial markets.
– The OBR was offered the ability to provide official forecasts but was initially brushed aside by the Chancellor at the time, Kwasi Kwarteng.
– New legislation now mandates the government to seek OBR forecasts for major fiscal changes, ensuring transparency and credibility.
– The law also grants the OBR powers to scrutinize departmental spending and access Treasury data, increasing its influence.
– Despite this enhanced role, some Treasury officials have expressed frustration about the OBR’s public commentary on government policy.
– Critics, including figures from the Institute for Fiscal Studies and some political commentators, warn of the risks of a “fiscal technocracy,” emphasizing that fiscal decisions are inherently political rather than purely technical.
– The OBR’s forecasts, such as those on productivity, have significant impacts on government borrowing calculations and budget decisions.
– There is debate within the Labour Party about the OBR’s influence, with some arguing it enforces austerity limits on spending growth, while the OBR itself asserts it only presents impartial economic forecasts, leaving policy decisions to elected officials.
– The idea of the OBR originated in a 2008 Conservative pamphlet titled “Reconstruction,” during the global financial crisis, reflecting a trend toward institutionalizing fiscal oversight to restore credibility.
If you would like, I can help summarize specific sections, explain the implications for UK fiscal policy, or provide context about the figures mentioned
Read the full article from The BBC here: Read More
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