MPs demand economic forecast alongside Kwarteng’s mini-budget
The Tory chairman of the Treasury Committee said such data is needed to ‘provide reassurance and confidence to international markets and investors’.
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Your support makes all the difference.MPs have demanded that an independent forecast of the UK’s economic outlook is published alongside Chancellor Kwasi Kwarteng’s mini-budget.
The Conservative chairman of the Commons Treasury Committee, Mel Stride, said data from the independent Office for Budget Responsibility (OBR) is vital to “provide reassurance and confidence to international markets and investors”.
But the Treasury is refusing to release such a forecast alongside Friday’s so-called fiscal event, in which Mr Kwarteng is set to unveil Liz Truss’s plans for vast tax cuts and details of the energy price cap, aimed at tackling the cost-of-living crisis and boosting growth.
We consider it very important that significant changes to taxation are announced in a fiscal event alongside an OBR forecast
Investors will be eager to find out details of the cost of the plans, which include reversing the national insurance hike and cancelling the planned rise in corporation tax.
The Prime Minister drew criticism and accusations of avoiding scrutiny when she said during the Tory leadership campaign that she would not request a forecast from the OBR – which would be required for a full budget – to accompany her fiscal event.
The Treasury Select Committee wrote to the Chancellor on Tuesday, insisting the fiscal statement should be accompanied by OBR data.
Mr Stride said the committee considers it “very important that significant changes to taxation are announced in a fiscal event alongside an OBR forecast”.
“These forecasts are a vital indicator of the health of the nation’s finances, and provide reassurance and confidence to international markets and investors,” he said.
The senior backbencher, an ally of Ms Truss’s rival in the leadership contest, Rishi Sunak, said the economic outlook had deteriorated since the OBR’s last forecast in March.
“There have been significant fiscal interventions since then and we are told there will be further significant interventions including major permanent tax cuts to be announced on Friday.
“Under these circumstances, it is vital that an independent OBR forecast is provided.”
The Treasury usually gives the OBR 10 weeks’ notice of a budget to enable it to provide an independent forecast of the economy and the UK’s fiscal position.
Last month, the OBR confirmed it could publish a mini-forecast alongside any fiscal announcement the Prime Minister might wish to make in September.
The body, which is typically required to produce two forecasts a year to accompany the autumn budget and spring statement, said it had begun to work on this on July 29, following agreement with the Treasury.
But the Government has indicated no forecast will be published alongside Mr Kwarteng’s mini-budget, emphasising the speed at which the new administration is moving to enact Ms Truss’s leadership campaign pledges.
A spokesperson for the Treasury said: “Given the exceptional circumstances our country faces, we have moved at immense speed to provide significant energy bill support for households and businesses, and are acting swiftly to set out further plans to kick-start economic growth later this week”.
A No 10 spokesperson also said: “The OBR’s forecast process usually takes 10 weeks. Whilst we could have asked the OBR to do one for this event, given the need to move swiftly, this would involve compromises in quality and completeness of a forecast. But we remain committed to maintaining the usual two forecasts in this fiscal year.”
Both stressed that the Government remains committed to maintaining the usual two forecasts in this fiscal year.
The refusal to release the OBR data means there will be no independent analysis of whether the announcements are in line with the Government’s existing budget rules, nor of the impact of the tax cuts on growth.