Chancellor Jeremy Hunt has been urged to end the ‘unhealthy dependence’ on Britain’s blundering fiscal watchdog.
In a report published today, the Conservative Way Forward (CWF) group said forecasting by the Office for Budget Responsibility had misjudged UK borrowing by £630 billion.
Using the OBR’s own analysis of its forecasting record, the CWF highlighted ‘huge forecasting inaccuracies’ that are determining ‘all decision-making at the Treasury’.
It found that the watchdog has consistently misjudged the amount that the UK borrows – with the total sum of errors equating to £630 billion for one-year ahead forecasts since 2010.
And the OBR is accused of making miscalculations about UK economic growth totalling £558 billion between 2010 and 2023.
Chancellor Jeremy Hunt (pictured) has been urged to end the ‘unhealthy dependence’ on Britain’s blundering fiscal watchdog
The CWF said the Government must now ‘look to end its unhealthy dependence on just one economic forecaster and should instead allow a diverse range of perspectives to provide scrutiny’ of its budget and fiscal events (File image)
Last October, the OBR said it ‘significantly underestimated the strength and persistence of inflation’ sparked by the pandemic and Russia’s invasion of Ukraine.
The CWF said the Government must now ‘look to end its unhealthy dependence on just one economic forecaster and should instead allow a diverse range of perspectives to provide scrutiny’ of its budget and fiscal events.
‘Working alongside economists with a range of opinions, backgrounds and experience would greatly strengthen the efficacy of the UK’s independent fiscal forecasting,’ the report noted.
It added: ‘The OBR’s shaky performance since 2010 risks culminating in a crisis of legitimacy unless it is able to break out of the cycle of miscalculation and error.
‘Working with economists that do not necessarily share the same academic background, registered interests or career path would breathe vitality into a process that has become stagnant and captured by a particular worldview.’
It also warns a Labour government would ‘strengthen the power of the OBR’, which it claims would increase the watchdog’s ability to comment on and ‘ultimately control’ economic policies.
More than 40 Conservative MPs and four Tory peers wrote to the Chancellor over the weekend urging him to engage with the report’s findings.
Backbenchers including Dame Priti Patel and Sir John Redwood said the figures were ‘deeply worrying’.
The letter states: ‘Sensible economic management cannot continue on this basis. At a time when the British public is having to make every penny count, more must be done to ensure that the OBR’s errors are not holding back the country’s recovery.’
Last night, former business secretary Sir Jacob Rees-Mogg, a signatory to the letter, told the Mail that the fiscal watchdog has ‘power without responsibility’. He added: ‘The OBR is the Great Panjandrum of Lefty think-tanks.’
An OBR spokesman said: ‘Both our borrowing and GDP forecasts are more accurate than those previously produced by the Treasury.’