TUC Calls for Review of OBR Ahead of October Budget

The Trades Union Congress (TUC) is urging Chancellor John Healey to initiate a comprehensive review of the Office for Budget Responsibility (OBR), citing concerns that its current methodology hinders economic growth. The TUC's call comes as Healey prepares for his first budget on October 28, 2023. The union argues that the OBR's assumptions, particularly regarding public investment, are outdated and detrimental to long-term economic planning.

TUC's Critique of OBR

According to the TUC, the OBR's approach assumes that public investment crowds out private capital, a claim disputed by various economists. Paul Nowak, TUC's general secretary, stated, "For too long, the OBR has been a millstone preventing good growth across the country." He emphasized the need for a review to align the OBR's assessments with modern economic realities, moving away from what he described as the "self-defeating logic of austerity."

The TUC's concerns resonate with other groups, including the New Economics Foundation and the think tank Progress, which have also called for a reevaluation of the OBR's role. Louisa Dollimore from the Good Growth Foundation characterized the OBR as "a backseat driver with out-of-date maps," suggesting that its current framework obstructs necessary investment during a critical period for the UK economy.

New Leadership at OBR

The OBR recently appointed Jonathan Haskel, a former member of the Bank of England's monetary policy committee, as its new chair. Haskel, who took over after the resignation of Richard Hughes, is expected to oversee a new economic forecast that will inform the upcoming budget. He has expressed a more cautious outlook, predicting "somewhat higher interest rates and weaker GDP growth than most are expecting," according to statements made to MPs on the Treasury select committee.

Based on reporting by: theguardian.com