Switch off the editor’s digest free of charge
Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
Chancellor Rachel Reeves does not expect that the British fiscal watchdog will receive a credit for her attempts to increase growth in the next month when he published his official forecasts.
Reeves is tailored to a strong downgrade in the office for the growth prospects of budget responsibility, which would blow a hole in their steering plans and force them to close the gap with billions of pounds or new tax increases.
The insiders of finance ministries fear that the OBR in areas such as planning, pensions or infrastructure, such as a third Heathrow Landenbahn, which is announced by the Chancellor, will not be taken into account by the Chancellor.
A person who was informed about Reeves’ Thinking said: “We are absolutely confident that we do the right thing and that these things will cause growth – it is only that the OBR will not achieve it.”
The government of Sir Keir Starrer described growth as the top priority, so that the forecasts of the OBR – which will accompany Reeves’ declaration of spring on March 26 – are probably politically painful.
Reeves has got into red against their most important budget rule to bring the budget into balance by 2029-30, since higher loan costs and weak growth put pressure on public finances, according to the familiar persons Pre -forecasts of OBR.
The numbers mean that the Chancellor would have to collect more than 10 billion GBP if it is to restore the fiscal cloud room that it had at the time of the October budget. Some analysts argue that it has to go beyond that to secure the credibility of the financial markets.
Officials have stated that the Chancellor will try to contain the expenses instead of lifting taxes, for example by Savings in the welfare budget.
James Bowler, the constant secretary of the Ministry of Finance, set an investigation into a “potential leak” of the OBR submission, which was first reported by Bloomberg on Wednesday. It is important that the ministers of watchdog and financial ministers could discuss forecasts “privately”.
The allies of Reeves admit that it is difficult to convince the OBR to “score” their pension pages reforms positively. The watchdog prefers to wait to see if they actually appear and deliver results.
Former conservative Federal Chancellor Jeremy Hunt said his experience with the OBR is that “they require many evidence of the effects of new guidelines before they are willing to improve their growth forecasts”.
“The first time that they did this for a chancellor was my childcare reforms in 2023, but even then it was much less generous than we had hoped.”
Ruth Curtice, a former finance officer who is now heading the Resolution Foundation, said: “The OBR have devilishly difficult criteria to achieve growth effects – the large, proven and occurrence within five years. Most problematic and must be clearly in addition to what is already implied in the forecast. “
Reeves is firmly convinced that it does the right in reforming areas such as pensions and planning and that it facilitates the establishment of living space and new infrastructure projects such as nuclear power plants.
“We always knew that this would be hard,” an adjutant told Reeves. “Short -term challenges are real and present, but everyone we talk to is actually quite confident.”
Mel Stride, Shadow Chancellor, said: “Since the Bank of England predicts growth, it is clear that this Chancellor has to make urgent course corrections before the damage that it does to the economy will be permanently.”
Economists expect economic pressure to deteriorate on Thursday when GDP data will be released in the fourth quarter. The economy was probably 0.1 percent compared to the previous three -month period afterwards Flat in the third quarter.
The Bank of England Halved his growth estimate of 2025 Last week, the economy awaited only three quarters of percentage points this year under the prediction of the OBR of 2 percent.
The Ernst & Young Item Club, another forecast, predicted growth of only 1 percent in 2025.
Boe predicts growth of 1.5 percent in 2026, which is also under the recent prediction of 1.8 percent of the OBR.
