Fiscal watchdog to unveil forecast for public finances despite cancelled Budget
The Office for Budget Responsibility will publish an updated fiscal outlook on November 7.
Britain’s fiscal watchdog has confirmed it will publish a new outlook of the public finances on November 7 despite next week’s Budget being cancelled.
In a letter to the Treasury, the Office for Budget Responsibility (OBR) said it would reassess the state of UK public finances since March due to major changes to the way student loans and pension schemes are accounted for in the figures.
But the November 7 forecasts will only provide its public finance baseline forecasts and will not provide a full economic and fiscal outlook, which would have been published had the November 6 Budget not been scrapped.
Given the importance of these changes for public understanding of the baseline against which the Government will need to judge its fiscal policy options, we believe that it would be useful to explain publicly the impact that they would have had Robert Chote, OBR chairman
The fiscal watchdog also said it would not have enough details to hand on Prime Minister Boris Johnson’s new Brexit deal to assess if the impact on the public finances will be different to the original deal drawn up under Theresa May.
It comes after official figures recently showed the first September hike in Government borrowing for five years.
Changes to the treatment of student loans – which now assume that many graduates will not be able to replay all their student debts – mean Chancellor Sajid Javid is likely to overshoot borrowing targets for this financial year.
Robert Chote, chairman of the OBR, said: “Barring a disruptive ‘no-deal’ Brexit, these are likely to be more significant than any like-for-like revisions when explaining the change from our March public finance forecast to the next one.
“Given the importance of these changes for public understanding of the baseline against which the Government will need to judge its fiscal policy options, we believe that it would be useful to explain publicly the impact that they would have had.”
In March, the OBR forecast public borrowing would rise from a 16-year low of 1.1% of economic output in 2018/19 to 1.3% of GDP or £29.3 billion in 2019/20.
But economists said figures for the year so far – at a revised £39 billion from April to September – signal he is on track to miss his aim to keep borrowing below 2% of GDP in 2020-21.
November 7 will also see the Bank of England publish its latest economic forecasts in its inflation report, accompanying the interest rate decision.
The Bank has already warned that “entrenched” Brexit uncertainty is hampering economic growth and left the door open to a possible rate cut in the event of this being prolonged if the withdrawal date is delayed yet again.
The OBR must publish two forecasts each financial year, but has yet to publish one in 2019-20.
Mel Stride, the newly appointed chairman of the Treasury Select Committee, said Mr Javid should “set out whether the OBR’s new analysis will contribute to their statutory duty to publish two forecasts each fiscal year”.
“If not, he should set out how he will support the OBR in publishing two forecasts in the remaining 22 weeks of the current fiscal year,” he added.