The OBR should be independent, trusted and uncontroversial – so it needs a rules-based framework in which to operate, otherwise it will continue to come under attack, says
David Aikman

The Office for Budget Responsibility (OBR) is preparing to cut its estimate of trend productivity growth. On the face of it, this seems sensible. Productivity has flatlined since the financial crisis and the OBR has been repeatedly – and somewhat heroically – optimistic about a recovery that never came. This would not be the first such downgrade: a major reassessment came in 2017, after Brexit, when It lowered the long-term productivity growth assumption by half a percentage point.

But this revision raises a familiar institutional problem. Trend growth is the single most important assumption in the OBR’s forecasts. It drives projections for tax revenues, welfare costs and ultimately the deficit and debt ratios. The IFS’ recent Green Budget estimated that each 0.1 percentage point reduction in annual trend growth increases borrowing by roughly £7bn by the end of the parliament. When such a powerful lever rests on expert........

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