The Office for Budget Responsibility (OBR), established during the Conservative-Liberal Democrat coalition, plays a significant role in shaping UK economic policy with a staff of around 50 based in Westminster. The OBR’s recent projections, particularly regarding economic growth and productivity, have influenced Chancellor Rachel Reeves’s policy decisions, including necessary welfare cuts earlier this year and anticipated tax increases in her upcoming budget scheduled for November 26.
As the Treasury plans for the future, there is an evident effort to gain more fiscal headroom in response to the OBR’s forecasts, which have previously left the government struggling to adjust fiscal plans. By downgrading the significance of the OBR’s spring forecast, the Chancellor aims to prevent the OBR’s assessments from dictating urgent policy shifts, which have previously required quick adjustments to spending plans in times of economic uncertainty.
Labor has embraced the OBR’s framework and has legislated to mandate the use of OBR forecasts in fiscal planning. This aligns with the administration’s strategy to instill confidence among investors in government bonds. However, tensions have emerged, with Reeves voicing concerns that the OBR’s timing on productivity forecasts should have correlated with economic assessments made during the previous Conservative government.
Recent polling challenges for Labour have heightened scrutiny of the OBR’s influence, drawing mixed reactions from political figures and economists, some of whom argue that the forecasting should be returned to the Treasury. Proposals include a shift to a single annual economic forecast instead of the current biannual system, as recommended by the International Monetary Fund. Nonetheless, Richard Hughes, head of the OBR, has expressed concerns that reducing the frequency of forecasts could diminish fiscal transparency.
Discussions surrounding the role and influence of the OBR remain contentious, with varying perspectives on how forecasting should be managed and its implications for fiscal policy and government decisions.
Source: https://www.theguardian.com/business/2025/oct/11/rachel-reeves-v-the-obr-chancellor-aims-to-loosen-the-watchdogs-grip