The Chancellor’s difficult choices

The Office for Budget Responsibility was designed to protect the Chancellor from accusations that he is cooking the books. If the forecasts are prepared by an independent body, there can’t be the suggestion – as there often was before the OBR’s creation in 2010 – that they have been politically influenced. But what the OBR cannot do is eliminate uncertainty.

In recent years, the likely trajectory of the financial future changed quite a lot from one month to the next: from interest rates and inflation to the Covid pandemic and Russia’s invasion of Ukraine. The OBR itself admits that it had to conduct its work without knowing the full economic implications of the war. But it has cut its growth forecast for the UK economy anyway. There is growing expectation in Whitehall that we could be in for a prolonged conflict – with sanctions remaining in place for years – which means more downgrades are likely.