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| Office for Budget Responsibility: What is the OBR and why does it matter? | Office for Budget Responsibility: What is the OBR and why does it matter? |
| (3 months later) | |
| The Office of Budget Responsibility (OBR) has said the UK is in a recession, and warned that the economy will shrink even further next year. | The Office of Budget Responsibility (OBR) has said the UK is in a recession, and warned that the economy will shrink even further next year. |
| It also said that in the two years after that, economic growth will be weaker than previously thought. | It also said that in the two years after that, economic growth will be weaker than previously thought. |
| What is the OBR and what does it do? | What is the OBR and what does it do? |
| The OBR checks the health of the UK's economy. It is independent of the government. | The OBR checks the health of the UK's economy. It is independent of the government. |
| Its forecasts are usually released alongside big government announcements such as the Budget and Autumn Statement. | Its forecasts are usually released alongside big government announcements such as the Budget and Autumn Statement. |
| Before the announcements, the government gives the OBR details of its plans to raise or lower taxes and how it intends to spend public money. | Before the announcements, the government gives the OBR details of its plans to raise or lower taxes and how it intends to spend public money. |
| The OBR checks the plans and makes economic forecasts covering the next five years. | The OBR checks the plans and makes economic forecasts covering the next five years. |
| These forecasts cover things like whether the government will spend more money than it raises, and whether the UK's economy will grow or get smaller. | These forecasts cover things like whether the government will spend more money than it raises, and whether the UK's economy will grow or get smaller. |
| Autumn Statement 2022: Key points at-a-glance | Autumn Statement 2022: Key points at-a-glance |
| What the Autumn Statement means for you | What the Autumn Statement means for you |
| What has the OBR predicted? | What has the OBR predicted? |
| The OBR has sharply downgraded its forecasts for the health of the UK economy. | The OBR has sharply downgraded its forecasts for the health of the UK economy. |
| It says that we are already in recession - which is when the economy shrinks continuously for six months. | It says that we are already in recession - which is when the economy shrinks continuously for six months. |
| Previously, it had said the economy would grow by 1.8% in 2023. Now, it is saying it will shrink by 1.4%. | Previously, it had said the economy would grow by 1.8% in 2023. Now, it is saying it will shrink by 1.4%. |
| The OBR says that in 2024, GDP - a measure of the size and health of a country's economy - will increase by only 1.3%, whereas it had previously forecast a rise of 2.1%. | The OBR says that in 2024, GDP - a measure of the size and health of a country's economy - will increase by only 1.3%, whereas it had previously forecast a rise of 2.1%. |
| In 2025, it now predicts a rise of 2.6% rather than 2.8%. | In 2025, it now predicts a rise of 2.6% rather than 2.8%. |
| Why is the OBR so important? | Why is the OBR so important? |
| In September, the government put forward a set of unfunded tax cuts in its mini-budget without consulting the OBR first. | In September, the government put forward a set of unfunded tax cuts in its mini-budget without consulting the OBR first. |
| The value of the pound crashed, signalling that international investors had no confidence in the government's measures. | The value of the pound crashed, signalling that international investors had no confidence in the government's measures. |
| The Bank of England was forced to step in to protect pension funds. | The Bank of England was forced to step in to protect pension funds. |
| The OBR had offered to prepare a draft forecast, but the government did not take up the offer. | The OBR had offered to prepare a draft forecast, but the government did not take up the offer. |
| Many said the government's refusal to consult the OBR was a key reason for the lack of investor confidence. | Many said the government's refusal to consult the OBR was a key reason for the lack of investor confidence. |
| Jeremy Hunt, who replaced Kwasi Kwarteng as chancellor after the mini-budget, says it was a mistake by the government to "fly blind". | Jeremy Hunt, who replaced Kwasi Kwarteng as chancellor after the mini-budget, says it was a mistake by the government to "fly blind". |
| Mr Hunt even pushed back the date of his autumn statement to allow time for the OBR to prepare an accurate economic forecast. | Mr Hunt even pushed back the date of his autumn statement to allow time for the OBR to prepare an accurate economic forecast. |
| He paid tribute to the work of the OBR during his Autumn Statement speech. | He paid tribute to the work of the OBR during his Autumn Statement speech. |
| Most of the tax cuts promised in the mini-budget have now been cancelled. | Most of the tax cuts promised in the mini-budget have now been cancelled. |
| Why do OBR forecasts matter? | Why do OBR forecasts matter? |
| The OBR uses its forecasts to assess whether it thinks the government is likely to meet the rules it has set for managing the economy. | The OBR uses its forecasts to assess whether it thinks the government is likely to meet the rules it has set for managing the economy. |
| In the Autumn Statement, the chancellor said he would be filling a £55bn black hole in government finances, through a combination of tax cuts and tax rises. | In the Autumn Statement, the chancellor said he would be filling a £55bn black hole in government finances, through a combination of tax cuts and tax rises. |
| The OBR's judgement on whether the government's plans are sound is important to investors. They help fund government spending by buying its bonds - which are a type of IOU. | The OBR's judgement on whether the government's plans are sound is important to investors. They help fund government spending by buying its bonds - which are a type of IOU. |
| This means some of the government's borrowing costs depend to a great extent on what markets make of the OBR's forecasts. | This means some of the government's borrowing costs depend to a great extent on what markets make of the OBR's forecasts. |
| Why was the OBR created? | Why was the OBR created? |
| The OBR was set up in 2010 under the Conservative/Liberal Democrat coalition government. | The OBR was set up in 2010 under the Conservative/Liberal Democrat coalition government. |
| Previously, the government produced its own economic forecasts. | Previously, the government produced its own economic forecasts. |
| The OBR was intended to result in independent analysis of the UK economy that could not be influenced by politics. | The OBR was intended to result in independent analysis of the UK economy that could not be influenced by politics. |
| Who is in charge of the OBR?The OBR is led by a Budget Responsibility Committee. It has three members, including the current OBR chairman Richard Hughes. | Who is in charge of the OBR?The OBR is led by a Budget Responsibility Committee. It has three members, including the current OBR chairman Richard Hughes. |
| The committee is responsible for the OBR's forecasts and its other main responsibilities. | The committee is responsible for the OBR's forecasts and its other main responsibilities. |
| Related Topics | |
| Recession | |
| GDP | |
| UK economy | |
| Jeremy Hunt | |
| Office for Budget Responsibility |