‘Expect cuts on a colossal scale’ – the IFS verdict on George Osborne’s Autumn Statement

Some of yesterday’s biggest announcements were not from the Chancellor at all, they were from the independent Office for Budget Responsibility. Robert Chote and his team announced two big changes to the public finances. The first was a really substantial downgrade to expected tax revenues. It’s the fall in expected revenues of nearly £8 billion this year which accounts for the disappointing fall in the size of the deficit. Look out just three years to 2017-18 and the shortfall hits £21 billion. This lack of buoyancy in tax revenues, associated with poor earnings growth, looks like being a continued cause for concern.

The only reason that that didn’t drive a coach and horses through the fiscal forecasts was that the OBR made an offsetting forecast change – to expected spending on debt interest, expected to be about £16 billion lower in 2017-18 than was expected back in March.

If nothing else the scale of these changes should remind us just how uncertain the fiscal forecasts really are.