Skip to content


Rishi Sunak should be used to gloomy economic forecasts. In his two years as Chancellor he was warned to brace for the worst jobs crisis since the 1980s, a recession unparalleled in three centuries and the biggest shock to public finances since the Second World War.

Not everything happened. Extending furlough – rather than ending it early as the Chancellor had planned – has prevented unemployment from rising to levels not seen since the days of his political idol Nigel Lawson.

Nonetheless, the Chancellor reportedly challenged the Office for Budget Responsibility for overshadowing his spring statement with dire economic forecasts. Anonymous sources told The Times that Sunak “absolutely viscerally hates the OBR”, saying the Treasury forecaster had made unidentified “normative policy judgments” – expressing an opinion on how things should be, rather than to portray the perspectives of the economy and the public in an unbiased manner. finance.

Sources close to Sunak played down the leak, suggesting there is no truth to the anonymous briefing. Still, it would fit a pattern. Leaks to another friendly newspaper suggested the Chancellor was frustrated with the BBC. Far from the image of the smooth operator of his first months in the business, the gloss of the Sunak brand seems to be running out.

There are good reasons why the tide is turning. None of this because impartial bodies put an ideological spin on things. Unfortunately for the Chancellor, the facts speak for themselves.

The Treasury’s independent economic forecaster had told the public that Britain was heading for the biggest annual fall in living standards since the mid-1950s, while Sunak fell far short of the tax cut he had proclaimed . The peroration to his spring statement promised the largest net personal tax cut in more than a quarter century. The OBR’s verdict, however, was clear: the tax burden would rise, not fall, to the highest level since Clement Attlee was prime minister in the late 1940s.

At worst, these statements could be accused of being a little too colorful for an impartial body. Richard Hughes, the chairman of the OBR, is said by those who know him to be passionate about such facts, ensuring that they are sprinkled into forecasts perhaps more easily than his predecessor, Robert Chote.

However, these cuts remain far from prescriptive. Such terms could attract media attention and risk overshadowing the Chancellor. Yet, clear and relevant communication is essential to convey sensitive economic issues to a wide audience. To err on the side of caution for a chancellor’s fragile ego would be folly.

Even so, it doesn’t take a colorful OBR report to know that the economic outlook is relentlessly bleak, as the inevitable consequence of a once-in-a-century pandemic is followed by war in Europe for the first time since decades.

In the face of intense pressure on living standards, a chorus of charities and think tanks warned that poverty was on the rise and questioned the Chancellor’s resolve to do all he could to help the most vulnerable people. at risk. Andrew Bailey, the Governor of the Bank of England, warned last week that the poorest in society would suffer the most from the worst inflationary shock since the 1970s. Yet intervening in the economy to affect distributive outcomes will not is not part of the Bank’s remit.

The verdict from the Institute for Fiscal Studies and the Resolution Foundation could hardly be clearer: Sunak has unique powers to shield families from the cost-of-living crisis, but chose to prioritize tax cuts pre-election papers for tomorrow before solving today’s problems. If Sunak was watching those overshadowing him by pointing it out, he would indeed make a very long list.

Without passing judgment on the advisability of his actions, the OBR said Sunak only made up for a third of the overall decline in living standards. He also said the Chancellor still had £30billion of fiscal firepower in the tank. It doesn’t take a Treasury watchdog to know that more could have been done. Moreover, Boris Johnson has told the public as much – admitting less than 24 hours after the spring statement that further action was warranted.

In Sunak’s defense, the watchdog warned that relatively minor changes to the economic outlook could wipe out that leeway within the self-imposed limits for public finances. Debt interest costs are set to hit a record £83billion next year, making it the fourth largest public spending item after the NHS, state pensions and education.

This is where the Chancellor may have wanted to draw public attention, in keeping with the spirit of George Osborne’s creation of the OBR as a form of straitjacket for government finances.

Created as a police officer to deliver deficit reduction in its course in 2010, the OBR – appropriately based at the Department of Justice just steps from the Treasury – was designed as a way to show Osborne was serious. as to the balance of accounts.

Some were cynical about its foundation. A senior politician said it was seen more as a gimmick at first, believing the Tories wanted their own Labor equivalent granting operational independence to the Bank of England in 1997.

He has been criticized for being subject to political influence in the past, including under Sunak as recently as last year, when he was accused of using outdated economic forecasts at his behest.

Times have changed, however, both for the OBR and for our collective economic priorities. He has become a vital authority on the economy, issuing clear reports when the Treasury might seek to bury bad news. Today, concerns are less about risks to public finances and more about outcomes for public welfare. “Frankly, we will never be Greece,” a senior politician told me.

As the National Institute for Economic and Social Research has argued, Britain should design a new fiscal framework to move away from a “fiscal” approach that views tax and spending decisions through the prism of economics. arbitrary targets, set at arbitrary dates coinciding with the elections.

In a world where too many government policies operate through the smoke and mirrors of political surprise and partial leaks, the OBR is an important check and balance.

Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.