Tue, 25 Nov 2025

Tue, 25 Nov 2025 Has Britain's budget watchdog become too all-powerful?

Ahead of this week's Budget, some have accused the Office for Budget Responsibility of being a "straitjacket on growth"
History of the OBR: The OBR was established by the coalition government in 2010 as a result of research from a pamphlet on best practices in fiscal policy. It was put on permanent statutory footing in 2011. Role and responsibilities: The OBR is responsible for providing independent economic forecasts, which inform the government's Budget decisions. It also provides analysis of the UK's public finances and assesses the government's fiscal sustainability. Impact on governments: Previous governments have faced criticism from the OBR, including:
* George Osborne's coalition government was criticized by the OBR for its austerity measures.
* Liz Truss's brief government claimed that a "deep state" had brought down her administration, with the OBR being part of this alleged conspiracy.
* The Johnson-Sunak era saw the OBR publish charts showing the tax burden reaching post-World War Two highs. Labour's strengthening of the OBR: The current Labour government has strengthened the OBR by appointing three new members to its Budget Responsibility Committee, who have distinguished CVs in fiscal policy and economics. Changes to the OBR-Treasury dynamic: From this year's Budget onwards, the OBR will only make its "headroom" calculation once a year, rather than every few months. This is intended to reduce speculation about tax rises and provide more stability for businesses and consumers. Defenders of the OBR: The article notes that defenders of the OBR argue that it is not responsible for the current system's problems with tax rise speculation, but rather a result of the government's own policies and reliance on foreign buyers of UK debt. Alternative approaches: The article suggests that countries like Sweden and Norway have managed without institutions like the OBR, raising questions about whether an alternative approach could work in the UK. Overall, the article presents a nuanced view of the OBR's role and impact, highlighting both its importance as an independent economic forecaster and its potential limitations.
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