"Treasury policymakers frustrated by the politically damaging timing of a downgrade to UK productivity forecasts by the Office for Budget Responsibility (OBR) are pressing the watchdog to score the benefits of Labour's pro-growth plans. Rachel Reeves faces the prospect of having to find up to 30bn in tax rises or spending cuts in her 26 November budget if, as expected, the OBR cuts its forecast for future productivity growth to match the consensus of other experts."
"After a carefully choreographed summer stocktake of its forecasting model, it is expected to cut future growth forecasts by up to 0.2% putting Reeves 20bn off course without any change in policy. That comes in addition to up to 10bn from a combination of recent policy U-turns on welfare cuts and the winter fuel allowance and the rising cost of government borrowing."
Treasury officials are pushing the Office for Budget Responsibility to score the benefits of Labour's proposed pro-growth measures. An expected downgrade to productivity forecasts could require Rachel Reeves to find up to 30bn in tax rises or spending cuts in the 26 November budget. The OBR has historically been more optimistic on productivity than many forecasters, but a model review is likely to reduce future growth forecasts by about 0.2%, creating a 20bn fiscal gap. That shortfall adds to up to 10bn from recent policy U-turns and higher government borrowing costs. Ministers are lobbying the OBR to reconsider elements such as planning legislation and recent trade deals.
Read at www.theguardian.com
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