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Office for Budget Responsibility: What is the OBR and why does it matter? | |
(32 minutes later) | |
An official forecast of how the UK economy is expected to perform will be published on 31 October, the government says. | |
Carried out by Office for Budget Responsibility (OBR), it will assess the impact of last month's mini-budget. | |
What is the OBR? | What is the OBR? |
The OBR is an independent body that examines the decisions taken in government Budgets. | The OBR is an independent body that examines the decisions taken in government Budgets. |
This includes setting out economic forecasts - calculations of the most likely thing that will happen in the future, given all the facts available. | This includes setting out economic forecasts - calculations of the most likely thing that will happen in the future, given all the facts available. |
But OBR forecasts were not published alongside the mini-budget on 23 September, despite the government being under pressure to provide an independent financial assessment. | But OBR forecasts were not published alongside the mini-budget on 23 September, despite the government being under pressure to provide an independent financial assessment. |
Financial markets reacted badly to the mini-budget plan to cut taxes by £43bn - the value of the pound fell and the cost of government borrowing went up. | Financial markets reacted badly to the mini-budget plan to cut taxes by £43bn - the value of the pound fell and the cost of government borrowing went up. |
Critics - including Parliament's Treasury Select Committee - suggested the lack of forecasts had contributed to this reaction, and called for them to be published. | Critics - including Parliament's Treasury Select Committee - suggested the lack of forecasts had contributed to this reaction, and called for them to be published. |
Kwarteng brings forward debt plan to calm markets | Kwarteng brings forward debt plan to calm markets |
Where does the government borrow billions from? | Where does the government borrow billions from? |
Why did the pound tumble? | Why did the pound tumble? |
Why were forecasts not published alongside the mini-budget? | Why were forecasts not published alongside the mini-budget? |
The OBR normally publishes its own forecasts alongside government Budgets. | The OBR normally publishes its own forecasts alongside government Budgets. |
It had offered to prepare a draft forecast in time for the mini-budget, but the government did not take it up. | It had offered to prepare a draft forecast in time for the mini-budget, but the government did not take it up. |
The Treasury defended the controversy. It said it had acted at "immense speed" to offer support for households. It added it remained committed to the OBR publishing official forecasts twice a year. | The Treasury defended the controversy. It said it had acted at "immense speed" to offer support for households. It added it remained committed to the OBR publishing official forecasts twice a year. |
Instead, in the aftermath of the mini-budget, the government asked the OBR to produce a forecast for 23 November. | Instead, in the aftermath of the mini-budget, the government asked the OBR to produce a forecast for 23 November. |
The forecasts will now be brought forward and published on 31 October - alongside the government's plan to pay for the measures and reduce debt. | The forecasts will now be brought forward and published on 31 October - alongside the government's plan to pay for the measures and reduce debt. |
The new date means the government's debt plan, along with the OBR forecasts, will be published before the Bank of England announces its next interest rate decision in early November. | The new date means the government's debt plan, along with the OBR forecasts, will be published before the Bank of England announces its next interest rate decision in early November. |
Bringing forward the OBR report could result in a smaller interest rates rise, if markets react positively, says Mel Stride, the chair of the Treasury Select Committee. | Bringing forward the OBR report could result in a smaller interest rates rise, if markets react positively, says Mel Stride, the chair of the Treasury Select Committee. |
Why does the OBR matter? | |
The OBR was created in 2010 to provide an independent analysis of the government's financial decisions. | The OBR was created in 2010 to provide an independent analysis of the government's financial decisions. |
It usually produces economic forecasts twice a year, to accompany each autumn Budget and spring statement. These are the events where the government outlines its main tax and spending policies. | It usually produces economic forecasts twice a year, to accompany each autumn Budget and spring statement. These are the events where the government outlines its main tax and spending policies. |
The OBR's forecasts sets out the cost and impact of new policies, how much tax will be raised and what it means for borrowing and growth. | The OBR's forecasts sets out the cost and impact of new policies, how much tax will be raised and what it means for borrowing and growth. |
These forecasts are important because a strong one gives investors confidence to put money into the UK economy - whereas a weak one is likely to have the opposite effect. | These forecasts are important because a strong one gives investors confidence to put money into the UK economy - whereas a weak one is likely to have the opposite effect. |
The government can request forecasts from the OBR at any time to get independent advice on big policy announcements. | The government can request forecasts from the OBR at any time to get independent advice on big policy announcements. |