The Treasury thinks it has a new friend: the Office for Budget Responsibility (OBR). During the delivery of his first Budget this afternoon, Chancellor Rishi Sunak referenced the economic forecaster multiple times, relying on its assessment of the Budget as proof that the ‘largest giveaway since 1992’ is still fiscally responsible. The OBR has ‘made an estimate they’ve never made before,’ boasted Sunak. ‘If future Governments have the same determination to continue our approach’ – by this he means more public spending – ‘the UK’s long-term productivity will increase by 2.5 per cent.’
But that’s a big ‘if’, even according to the Chancellor’s new friend. At the OBR’s post-Budget briefing today, chairman Robert Chote stressed how ‘little’ of this boost will show up in the 5-year horizon: ‘a lot (will) depend”, he said “on what this money actually gets spent on. Does it end up being spent on stuff that is actually going to have lasting improvements on potential GDP?”
Given its fervent commitment to projects like HS2, it’s not remotely clear that the Government is prepared to spend as efficiently as it might need to leverage its stimulus package.
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