Category Archives: Office for Budget Responsibility

OBR says budget unlikely to lift economic growth over next five years

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Forecaster says extra spending revealed by Rachel Reeves will give only a short-term lift to economy

Labour has embarked on a “large, sustained increase in spending, tax and borrowing”, according to the government’s economic forecaster, as it judged that Labour’s first budget for 15 years is unlikely to increase economic growth over the next five years.

Assessing Rachel Reeves’s policies, the Office for Budget Responsibility (OBR) said the economy would expand at the same rate as predicted in March by the end of the parliament, despite a £70bn-a-year rise in spending.

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OBR to publish breakdown of claimed £22bn ‘black hole’ on budget day

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Former chancellor Jeremy Hunt says decision to publish findings of review on Wednesday is ‘significant concern’

Britain’s fiscal watchdog is to publish a detailed breakdown of the £22bn “black hole” that Labour says it inherited after Rachel Reeves presents the budget on Wednesday.

The Office for Budget Responsibility will release the conclusion of its review of how the forecast for departmental spending for its last economic and fiscal outlook, published for the March budget, was prepared.

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Infrastructure taskforce to help chancellor avoid financial sector turmoil

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Rachel Reeves is to seek advice from City experts to ensure big projects’ value for money and reassure markets

Rachel Reeves, the chancellor, is taking action to ensure her budget plan for a multibillion-pound increase in government borrowing to fund infrastructure projects avoids a Liz Truss-style meltdown in financial markets.

Ahead of her tax and spending event on 30 October, the chancellor is convening on Friday the first meeting of a taskforce of leading City figures to advise on infrastructure projects. The government will also launch a watchdog to oversee public works and ensure value for money for the taxpayer.

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Labour needs £25bn a year in tax rises to rebuild public services, warns IFS

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Thinktank says tax increases in budget will be necessary even if Rachel Reeves changes fiscal rules

Keir Starmer’s promise to end austerity and rebuild public services will require tax increases of £25bn a year in the coming budget even if debt rules are changed to provide scope for extra investment spending, a leading thinktank has said.

In its preview of the first Labour budget in 14 years, the Institute for Fiscal Studies said Rachel Reeves would need to raise taxes to fresh record levels to meet the government’s policy goals. The chancellor was also warned of the risk of a Liz Truss-style meltdown if the City responded badly to substantially higher borrowing.

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Labour MP pushes for watchdog to assess PFI costs under budgets bill

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Stella Creasy says she wants to put school and hospital debts and impact of trade deals ‘on nation’s books’

A senior Labour backbencher is seeking to have liabilities from schools and hospitals built under private finance initiative (PFI) deals scrutinised under a new budget responsibility bill.

Stella Creasy, who has tabled two amendments to the bill, said this would help highlight the scale of debt incurred. She also wants trade deals such as the post-Brexit arrangement with the EU to fall under its remit, arguing these can have an even greater fiscal impact.

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Rachel Reeves planning to raise taxes and cut spending in October budget

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Chancellor insists she still has large black hole to fill despite stronger-than-expected growth in first half of 2024

Rachel Reeves is planning to raise taxes, cut spending and get tough on benefits in October’s budget amid Treasury alarm that the pickup in the economy has failed to improve the poor state of the public finances.

With the latest official set of borrowing figures out on Wednesday, the chancellor is insisting she will still have a substantial black hole to fill despite stronger than expected growth in the first half of 2024.

Raising more money from inheritance tax and capital gains tax.

Sticking to plans for a 1% increase in public spending even though it would involve cuts for some Whitehall departments.

Rejecting pressure to scrap the two-child benefit cap.

Changing the way debt is measured to exclude the Bank of England.

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Starmer’s growth plan ‘doomed’ without access to EU markets, warn economists

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Labour leader told if elected he will have to rejoin the customs union to meet party’s manifesto pledges, while 56% of voters say Brexit was bad for economy

A Labour government under Keir Starmer will fail to maximise the UK’s economic growth unless it takes the country back into the European Union’s single market and customs union, leading economists and diplomats have said.

The warnings come as an Opinium poll for the Observer finds that 56% of voters now believe Brexit has been bad for the UK economy as a whole, compared with just 12% who believe it has been economically beneficial.

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Watchdog ends investigation into description of UK economy ‘going gangbusters’

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Exclusive: ONS official’s remarks, not intended as comment on overall state of the economy, were later used by Sunak

The UK’s statistics watchdog has closed an investigation into remarks made by an official about the economy “going gangbusters” that were cited by Rishi Sunak.

It was looking into the comments made by chief economist of the Office for National Statistics (ONS) last month amid concerns that politicians could misuse economic data in the run-up to the election.

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Jeremy Hunt’s scope for tax cuts hit by higher-than-expected borrowing

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Government borrowed £120.7bn in the last financial year, with just under £12bn in March

Jeremy Hunt’s scope for a substantial pre-election tax giveaway has been hit after the latest set of official figures showed the UK’s public finances in worse shape than thought at last month’s budget.

Figures from the Office for National Statistics (ONS) showed the government borrowed £120.7bn in the 2023-24 financial year – £6.6bn more than the Office for Budget Responsibility (OBR) had expected.

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UK government borrowing higher than expected in February

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Borrowing of £8.4bn last month could threaten OBR forecast for £114.1bn deficit for 2023-24 as a whole

Jeremy Hunt has been handed disappointing news from the public finances after government borrowing was higher than expected in February, leaving the national debt at the highest levels since the 1960s.

The Office for National Statistics said public sector net borrowing was £8.4bn in February, £3.4bn less than in the same month a year ago. However, it was higher than any economist expected in a Reuters poll that predicted a deficit of £6bn.

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Jeremy Hunt suggests tax cuts in budget won’t match last year’s £20bn giveaway – UK politics live

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The chancellor said he wanted to manage people’s expectations ahead of the spring budget

The UK needs a government guided by clear purpose, Reeves says.

Labour has set out five missions. But they are all tied to the economic mission – to raise growth.

These are the symptoms of economic decline.

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Jeremy Hunt fuels election speculation as 6 March spring budget announced

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Chancellor has asked the OBR to prepare forecasts for the economy and public finances to be presented to parliament

Jeremy Hunt has announced that a spring budget expected to feature a host of tax cuts will be held on 6 March, fuelling speculation over an early general election.

While government sources insisted nothing should be read into the date, it is the earliest the set-piece fiscal event has been held in 13 years of Conservative government – apart from 2021 when the Treasury was trying to kickstart the economy after Covid.

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No bounce for the Tories after tax-cutting budget, poll shows

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Opinium poll for the Observer reveals the public is unimpressed with Jeremy Hunt’s attempt to woo them by trimming national insurance

Rishi Sunak has received no poll bounce after cutting taxes in last week’s autumn statement, according to the latest Opinium poll for the Observer.

Following a week in which the chancellor, Jeremy Hunt, described a reduction in national insurance as “the biggest tax cut on work since the 1980s” Labour’s lead has increased to 16 percentage points over the Tories.

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Autumn statement live: Jeremy Hunt cuts national insurance as OBR downgrades UK growth forecast

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Chancellor cuts employee national insurance to 10% while abolishing class 2 national insurance

Keir Starmer has said that a pause in hostilities between Israel and Hamas must be used to tackle the “urgent and unacceptable humanitarian catastrophe” in Gaza.

Welcoming the deal, which is expected to involve the release of 50 hostages being held by Hamas and a number of women and teenagers from Israeli jails, the Labour leader said his party had been calling for “a substantial humanitarian pause”. He said:

There must be immediate access to aid, food, water, fuel and medicine to ensure hospitals function and lives are saved. Aid and fuel need to not just get in but be distributed widely and safely.

We must also use the space this pause creates to take more steps on a path towards a full cessation of hostilities rather than an escalation of violence.

The real function of the projected spending squeeze is as a trap for Labour. If the opposition rejects the Tory trajectory, it will be accused of planning a profligate spree with public money. And if it pledges adherence to impossible targets, it will enter government with its hands bound too tight to deliver prompt satisfaction to the people who voted for it.

Keir Starmer and Rachel Reeves have so far operated a sensible policy of not walking into traps of this kind. That approach restored swing voters’ trust in Labour as stewards of the economy. But it tests the patience of an activist base that sees reversal of austerity as a moral imperative and can smell the incipient disappointment in promises of fiscal discipline.

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OBR halves UK growth forecast and warns inflation will exceed 2% target until 2025

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Despite £27bn windfall for the autumn statement, government forecaster warns of generally more difficult outlook until 2028

The government’s official forecaster has slashed its predictions for economic growth over the next two years, and warned that inflation could take until 2025 to come back to the official 2% target.

In an updated financial health check to accompany the autumn statement, the Office for Budget Responsibility (OBR) said a more resilient economy this year had handed the chancellor a £27bn budget windfall, but it warned of a more difficult outlook up to 2028 than previously forecast at the time of the budget in March.

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Labour motion to ban Truss-style budget meltdowns puts pressure on Tory MPs

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Party loyalty would force Conservatives to vote against plan for fiscal responsibility

Read more: ‘I challenge Rishi Sunak: vote with Labour to stop a Truss-style disaster happening again,’ writes Rachel Reeves

Labour will force a Commons vote this week aimed at creating new legal safeguards against fiscal disasters such as Liz Truss’s catastrophic mini-budget, which sent the financial markets into meltdown and drove up mortgage rates.

The party’s plan for a “fiscal lock” to protect personal, family and the national finances from reckless politicians will be contained in an amendment to the king’s speech that will be voted on by MPs on Tuesday. The manoeuvre will present Conservative backbenchers with a dilemma over whether to back a Labour amendment, or vote against what is a plan designed to embed fiscal responsibility into the budgetary process, and protect it from wild or accidental political misjudgments.

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Sunak strives to be reassuring but is five-point plan all sleight of hand?

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PM plans a ‘no tricks’ reset but with an inflation fall already expected this is more about hanging on at an election

In his first big speech since taking over at No 10, Rishi Sunak promised “no tricks, no ambiguity” as he announced his five promises to reset the government after a difficult year.

The prime minister said he would be focusing on halving inflation, growing the economy, reducing debt, cutting NHS waiting lists, and stopping small-boat crossings to the UK.

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Autumn statement 2022 live: OBR says living standards to fall 7% as Hunt confirms millions to pay more taxes

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Fiscal watchdog’s figures show eight years of growth wiped out; chancellor announces higher taxes and some cost of living support

In the Commons Rishi Sunak is making a statement about the G20 summit. These statements are normally routine, and just summarise what was said or decided at the meeting. They don’t normally include fresh announcements.

Sunak started by talking about the missile incident in Poland. He said Russia attacked Ukraine with missiles on the day that he “confronted the Russian foreign minister across the G20 summit table”. He said the blame for the missile landing in Poland lay with Russia. Ukraine could not be blamed for defending itself, he said.

During the bombardment of Ukraine on Tuesday an explosion took place in eastern Poland. The investigation into this incident is ongoing and it has our full support.

As we’ve heard the Polish and American presidents say, it is possible the explosion was caused by Ukrainian munition which was deployed in self-defence.

In just a few moments the chancellor will build on these international foundations when he sets out the autumn statement, putting our economy back on to a positive trajectory and restoring our fiscal sustainability.

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Jeremy Hunt to outline £60bn of tax rises and spending cuts

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Guardian understands early drafts of UK government’s autumn statement include at least £35bn reduction in spending

Jeremy Hunt will set out tax rises and spending cuts totalling £60bn at the autumn statement under current plans, including at least £35bn in cuts, the Guardian understands.

Ministers must submit the key points of the autumn statement to the Office for Budget Responsibility (OBR) by Monday morning.

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Unfunded tax cuts mean UK ‘will need £60bn spending cuts’

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IFS says Kwasi Kwarteng’s mini-budget will leave ministers making serious reductions in public services

Kwasi Kwarteng will need to find £60bn of savings by 2026 to fill the gap left by unfunded tax cuts and the costs of extra borrowing triggered by a panicked reaction on international money markets to the chancellor’s “mini-budget”, according to the Institute for Fiscal Studies.

The UK will also struggle to hit the chancellor’s 2.5% growth target, with economic forecasts by the investment bank Citigroup that the IFS uses to underpin its analysis showing the UK will struggle to grow at more than 0.8% on average over the next five years.

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