The OBR is Shite!

OBR Screws Up Yet Again

 

Remember that OBR lot, the so-called "independent" watchdogs of Whitehall's wallet? 

Well, they've gone and done it again – tripped over their own spreadsheets and missed the December borrowing figures by a whopping six billion quid.

While the OBR were busy pencilling in a hefty £14bn December deficit, the actual figure came in at a measly £7.8bn. That's, as the Americans might say, a "yuge" £6bn miss – the kind that makes you question if these fiscal soothsayers even bother to look at the books before predicting the future.

So, what went wrong? 

Well, the usual suspects. VAT receipts were higher than the OBR's estimate, income tax took a surprise bite out of paychecks, and even government spending was a tad more restrained than expected. Turns out, sometimes reality doesn't always follow the OBR's economic origami models.

Now, the interesting bit. This unexpected borrowing bonanza has Chancellor Jeremy Hunt singing a different tune. Gone are the doom-and-gloom pronouncements about austerity and belt-tightening. Now, it's all sunshine and rainbows, with whispers of tax cuts dancing on the breeze. Apparently, when the coffers are unexpectedly full, even the tightest-fisted Tory starts feeling a bit generous. Suddenly, that £20 billion giveaway he's been whispering about doesn't seem so pie in the sky.

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"Unexpected Fiscal Headroom" - Michael Brown Nails It!

"unexpected fiscal headroom" ≠ economy doing brilliantly

"unexpected fiscal headroom" = OBR got everything wrong, yet again

— Michael Brown (@MrMBrown) November 21, 2023

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OBR Says "The Economy's Fucked"

 

The UK's public finances are on a "very risky footing" after a series of shocks, the Office for Budget Responsibility (OBR) has warned.

The OBR's latest forecasts show that the UK's budget deficit is set to reach £102 billion in 2023-24, up from £99 billion in the previous year. This is the highest level of borrowing since the early 1990s.

The OBR's warning comes as the UK economy faces a number of challenges, including the cost-of-living crisis, the war in Ukraine, and the ongoing COVID-19 pandemic.

— state pension costs to rise by £23 billion by 2027-8

 — EVs to take £13bn a year from Treasury in lost fuel duties by 2030

 — net zero shift may cost £17bn a year

— UK public debt on an “unsustainable path” soaring to more than 300% of gross domestic product by 2072-73 

 — Stopping debt rising above 100% of GDP will require tax rises and spending cuts of 4.4% of GDP in 2028-29 

The OBR said that the government's tax and spending plans are "not enough" to address these challenges. It called for "urgent action" to reduce the deficit and bring public finances under control.

The OBR's warning is a major blow to the government, which has been hoping to reduce the deficit in the coming years. The government's plans to raise taxes and cut spending are likely to be met with resistance from businesses and unions.

The OBR's warning also raises questions about the UK's economic future. The UK is already facing a number of challenges, and the OBR's warning suggests that these challenges are likely to get worse in the coming years.

If the government does not take action to reduce the deficit, the UK's public finances could become even more precarious. This could lead to higher taxes, lower spending on public services, and a weaker economy.

The OBR's warning is a wake-up call for the government. It is clear that the UK's public finances are in a very risky position. The government needs to take urgent action to address this challenge, or the UK's economic future could be in jeopardy.

What does this mean for you?

The OBR's warning means that you can expect to see higher taxes and lower spending on public services in the coming years. This could have a significant impact on your finances, and you should start planning for these changes now.

You should also be aware of the risks to the UK economy. The OBR's warning suggests that the UK economy could be in for a rocky ride in the coming years. This could lead to job losses, lower wages, and a decline in living standards.

What should the government do?

Ditch the net zero bollocks immediately!

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The OBR Fucks Up a Forecast Again!

UK government borrowing in the financial year to date (ie. April to January) was £30.6 billion *lower* than forecast by the OBR.

Yet another useless forecast by the ever useless OBR. 

The OBR is one of Brown's many failed legacies. The OBR should be put out of its, and everyone else's misery as it is clearly fucking worthless!

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Kwarteng's Halloween Event

 

Kwasi Kwarteng has brought forward the OBR forecast to 31st Oct.

Theoretically this might give the MPC room for some manoeuvre on their interest rate decisions in the following week. 

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Good Luck To Richard Hughes - New Chairman of OBR

Welcome to Richard Hughes, who begins his first term as Chairman of the Office for Budget Responsibility today.https://t.co/8zoJD1bMkE pic.twitter.com/MoAI3RkpJG

— Office for Budget Responsibility (@OBR_UK) October 5, 2020

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OBR Forecasts £220BN Budget Deficit

In our scenario, the shock to the economy and the huge Government policy response raise this year’s budget deficit by around £220bn to around 14% of GDP and public debt to around 100% of GDP. #OBRcovidscenario pic.twitter.com/TJBOXgui5w

— Office for Budget Responsibility (@OBR_UK) April 14, 2020

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OBR Forecasts Quick Recovery

Our three-month lockdown scenario sees GDP fall by a third, but with a quick recovery as the restrictions are lifted. #OBRcovidscenario pic.twitter.com/raiu16Q8qV

— Office for Budget Responsibility (@OBR_UK) April 14, 2020

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Coronavirus Scenario By The OBR - Coming Soon!

At midday today we’ll publish results of a coronavirus scenario illustrating the possible effects on the economy and public finances of a 3-month shutdown and the Government’s policy responses. This is *not* a forecast, just 1 scenario of many that could unfold. #OBRcovidscenario pic.twitter.com/znxkoDXBOW

— Office for Budget Responsibility (@OBR_UK) April 14, 2020

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OBR Cancels Fiscal Sustainability Report

As per the Office for Budget Responsibility:

"Given the timing and result of the referendum, and the current uncertainty around our future relationship with the EU, producing projections based on our March forecast would not necessarily be very informative. To produce meaningful long -term project ions we would need to make a new medium -term forecast (which we will not be doing until the autumn) and new long - term assumptions in areas such as productivity growth and migration flows (which would be affected by the trade arrangements the government decides to pursue). 

Under these circumstances, we have decided to cancel July’s FSR ."

Odds of Greece Leaving The Euro? Check William Hill

I am amused to see that the Office of Budget Responsibility (OBR), wary of the likelihood of Greece leaving the Euro, checks the odds of Greece leaving at William Hill the bookmakers.

The Telegraph reports that the OBR’s Steve Nickell told the Treasury Select Committee:

“Occasionally I go and look at William Hill, they have the odds on these sorts of things. Last time I looked, the odds of Greece not using euro by the end of the year were the order of about 40pc, a bit lower after the latest Greek bail-out talks.”

Minuscule Chance Of Euro Collpase

Stephen Nickell, a member of the Office for Budget Responsibility (OBR), told the Treasury Select Committee that there was a minuscule (1.7%) chance of the Euro collapsing.

Ireland, despite initial fears of it not being able to pass its budget package, looks like it has gained enough support for it to be able to approve its budget this afternoon; thus offering much needed respite to the beleaguered Euro.

Time will tell as to whether the 1.7% (such a precise figure!) odds quoted by Mr Nickell reflect reality.

History is littered with the corpses of previous attempts at currency unions.

The Orifice Of Budget Responsibility

Sir Alan Budd, who is leaving as Chairman of the Office for Budget Responsibility after a mere 3 months in the role, appeared before the Treasury Select Committee (TSC) yesterday.

The TSC was keen to probe beneath the public perception that the OBR is not as "independent" as the government, and indeed OBR, would have us believe.

Sir Alan claimed that he had not come under political pressure recently, even though he released public sector jobs data early. He claimed that this was to correct a misinterpretation of figures leaked to the media, the fact that this was of benefit to David Cameron who used the data with glee was (of course) irrelevant.

Sir Alan, who has yet has no successor to replace him, has issued advice to the successor as to the future of the OBR eg:

- the need to relocate it outside the Treasury,
- allow Parliament a role in appointments to the OBR's key committee
- employ both external and Treasury staff to produce its forecasts and analysis.

He neglected to add that his future successor needs to be put on a contract longer than 3 months, allegedly the length of Sir Alan's contract (one wonders why, if that is truly the case, there is no successor lined up yet?) if he/she is to be effective.

As to whether the government and Treasury actually want a truly independent OBR, remains to be seen. Doubtless their choice of Sir Alan's successor may shed some light on that.

We await the announcement with interest!