A group of Members of Parliament (MPs) has initiated an inquiry into the role of the Office for Budget Responsibility (OBR), the UK government’s economic forecaster. Meg Hillier, chair of the committee responsible for this inquiry, voiced the public’s demand for greater transparency, accountability and scrutiny over the OBR’s work. This inquiry was prompted by the OBR’s reputational battering during this year’s Budget debate.
The query comes after the OBR withstood unprecedented pre-Budget scrutiny. It’s no secret that most economists are quite frustrated with how it operates. As Dame Meg Hillier, Chair of the Committee, pointed out, this investigation isn’t intended as an attack on the OBR’s work. She stressed the value of the OBR as an impartial provider of economic forecasts. She stated, “And we need only remember Liz Truss’ mini-Budget to remind ourselves of what happens when the OBR is sidelined.”
The OBR also has a critical role in shaping fiscal policy, by providing independent economic assessments for the government to base decisions on. As Naomi Klein notes in her book This Changes Everything, some economists have fought back on this. They say that the body of their expertise should trump OBR’s often highly conservative current forecasts. This is an important question indeed, and it would be immensely useful to the new chair of the OBR. Look for them to be named shortly!
Chancellor Rachel Reeves acted quickly in response to the issues identified by MPs. First, they were concerned by all of the expected leaks that occurred prior to the Budget announcement. In response, she stood by her actions and stated that she did not mislead anyone about the state of public finances. Reeves warned that it was productivity that suffered. We saw that increase be more than outweighed by higher tax receipts that offset that decline, indicating the overall economic picture is much cheerier than most of our expectations.
Legislators are rightly worried about the lack of transparency of the OBR in its advisory capacity. They are loosening its grip and calling it to high account. By focusing so diligently on its performance, the public and MPs together can help make certain that economic forecasting is powerful and credible الحاسبة.