THE Prime Minister and Chancellor will “work closely” with the Office for Budget Responsibility (OBR) in the coming weeks and said they “value” the watchdog’s scrutiny, the Treasury has said.
Following an unusual meeting with Liz Truss and Kwasi Kwarteng – which appeared to last under 50 minutes – the OBR confirmed it will deliver an initial forecast to the Chancellor on October 7 which “will, as always, be based on our independent judgment about economic and fiscal prospects and the impact of the Government’s policies”.
It said it will set out the full timetable up to November 23 next week, when the Chancellor is due to reveal his highly-anticipated medium-term fiscal plan.
It comes after the Chancellor came under fresh pressure to explain why his mini-budget was delivered without an up-to-date forecast from the OBR, after the watchdog revealed that it had prepared a draft forecast for the new Chancellor on his first day in office.
The lack of such a forecast had been one of the issues that reportedly troubled the City after the Chancellor’s announcement.
In a letter to the SNP Westminster leader Ian Blackford and the party’s shadow chancellor Alison Thewliss, OBR chair Richard Hughes confirmed that the body sent “a draft economic and fiscal forecast to the new Chancellor on September 6”.
He said that the OBR was not commissioned to produce an updated forecast, but confirmed that it would have been in “a position to do so to a standard that satisfied the legal requirements of the Charter for Budget Responsibility”.
Treasury and Downing Street sources hit back at suggestions that the talks were an emergency meeting, even as Tory MPs called for the Chancellor’s promised plan to be brought forward to further calm jittery markets.
Treasury minister Andrew Griffith played down the significance of the meeting, telling Sky News: “It seems to me a very good idea that the Prime Minister and Chancellor are sitting down with the independent OBR. Just like the independent Bank of England, they have got a really important role to play.
“We all want the forecasts to be as quick as they can, but also as a former finance director I also know you want them to have the right level of detail.”
Other sitting MPs expressed hope the meeting will mark the start of a process to win back the confidence of the markets, after the £45 billion tax-cutting package announced by the Chancellor last Friday plunged the pound to historic lows and forced the Bank of England to intervene to calm the markets.
It launched an emergency government bond-buying programme to prevent borrowing costs from spiralling out of control and stave off a “material risk to UK financial stability”.
The Chancellor is now scheduled to deliver his medium-term fiscal plan – explaining how he would get debt falling as a percentage of GDP, alongside the updated OBR forecasts – on November 23.
