IFS warns Osborne: don’t cook the books, like Brown

The Institute for Fiscal Studies has today published its attempt to predict what the OBR forecasts will show when they’re released as George Osborne sits down after delivering his Autumn Statement next week. They put forward two possible scenarios: a ‘pessimistic’ one where the economy’s recent weakness is largely permanent, and an ‘optimistic’ one where it is largely temporary. In both scenarios, they show Osborne missing his ‘supplementary target’: to have the debt-to-GDP ratio falling by 2015-16. But these forecasts exclude the effect of transferring of the interest on the Bank of England’s Quantitative Easing purchases to the Treasury. As I reported on Friday, that effect might be enough to allow Osborne to meet his debt target even despite the weakness in the economy and the deterioration in the public finances. But the IFS cautions that Osborne would be wrong to claim success if that’s the case:

‘it would be disingenuous for the Chancellor to claim that he was still on course to meet his supplementary target purely as a result of such a change.