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For the first time since its creation in 2010, the Office for Budget Responsibility (OBR), Britain’s independent fiscal watchdog, is facing intense criticism from politicians across the political spectrum. Once regarded as a credible and impartial institution, the OBR now finds itself at the center of debates over economic forecasts, fiscal rules, and public trust.

Origins and Mandate of the OBR

The OBR was established in May 2010 under the coalition government of the Conservatives and Liberal Democrats. Its primary role was to provide independent and forward-looking scrutiny of government finances, restoring credibility after the 2008 financial crisis. At the time, the U.K. faced a deficit-to-GDP ratio of around 10%, and Chancellor George Osborne emphasized the need for a fiscal council to prevent governments from justifying deficits with past surpluses.

The office was initially led by economist Alan Budd, followed by Robert Chote, who held the position for a decade, and currently Richard Hughes serves as chair. Over 15 years, the OBR built a reputation for accurate fiscal forecasts and independence from political influence, influencing both budget decisions and public debate.

Growing Criticism from Left and Right

That reputation is now under attack. Former Prime Minister Liz Truss has been among the OBR’s fiercest critics, arguing that it constrains government policy and should be abolished. Truss pointed to her administration’s sidelining of the OBR before the 2022 mini-Budget as evidence that independent forecasts can interfere with government flexibility.

On the left, criticism has emerged in response to Chancellor Rachel Reeves’ plans for welfare cuts. The OBR questioned the savings estimates of previous policy packages, prompting the government to adjust its approach. Critics, including MPs like Debbie Abrahams and unions led by TUC General Secretary Paul Nowak, argue that short-term forecast changes should not dictate long-term decisions affecting millions of citizens.

The New Statesman has accused governments of using the OBR as a tool to justify austerity, portraying difficult fiscal choices as mandated by spreadsheet logic rather than democratic decision-making.

The Autumn Budget and Forecast Challenges

The pressure on the OBR is likely to increase as Chancellor Reeves prepares the autumn Budget. Analysts expect the OBR to downgrade its economic forecasts, potentially forcing new tax increases to comply with fiscal rules. Yields on 30-year inflation-linked gilts recently reached their highest level since 1998, highlighting the market’s sensitivity to U.K. fiscal policy.

Critics of the OBR often cite its record on predicting productivity as a weakness, although most economists face similar challenges. Former Osborne advisor Rupert Harrison emphasizes that the constraints stem more from political choices than the OBR’s performance.

Calls for Reform

Some voices advocate for reforming or replacing the OBR. The New Economics Foundation has proposed an Office for Fiscal Transparency, staffed by a committee of nine economists to provide independent forecasts alongside the Treasury. The idea aims to reduce the influence of unelected officials while increasing transparency and democratic oversight.

While these proposals offer potential improvements, any major changes carry significant risk. With markets closely monitoring Britain’s fiscal stability, it would be a bold move for any chancellor to alter the existing framework, especially ahead of upcoming elections.

Looking Ahead

The debate over the OBR reflects broader tensions in U.K. economic policy: balancing independence with political accountability, ensuring accurate forecasts without over-constraining government action, and maintaining public trust in financial institutions. As the autumn Budget approaches, all eyes will be on how the OBR navigates economic uncertainty and political pressure, and whether reform proposals gain traction.

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