OBR forecasts likely to show £60bn-£70bn hole after Kwarteng’s mini-budget
Kwasi Kwarteng has been handed independent forecasts on the state of the UK finances that are expected to show a hole of more than £60bn left by his sweeping tax cuts and a sharply slowing growth outlook.
At the end of a turbulent week for Liz Truss’ government, the chancellor was on Friday handed the initial predictions for the economy and public finances by the Office for Budget Responsibility (OBR) which are likely to paint a gloomy picture.
Sir Charlie Bean, a ex-member of the independent watchdog and a former Bank of England deputy governor, said the document would probably show a large shortfall for the exchequer.
“It will be in the order of £60bn to £70bn relative to its previous forecasts,” he said, adding that Kwarteng would face three options: further U-turns on his tax-cutting plans, deep cuts to public spending, or risking the ire of already rattled financial markets by substantially adding to the national debt.
“What he’ll be confronted with, and I don’t think to be honest most observers and MPs have really woken up to this yet, is the extent to which the public finances has deteriorated since the spring,” Bean said.
“It will be interesting to see what the chancellor comes up with, what rabbits he can pull out of the hat. They could U-turn on the tax cuts they announced a fortnight ago, but that of course I’d say would be politically terminal for the Truss government.”
The Treasury was on Friday closely guarding the details of the OBR forecast, despite pressure from rebellious backbench Conservative MPs demanding an early release of the estimates for economic growth and the public finances.
Monetary policy
The job of the Bank of England, which since 1997 has had the statutory task of hitting the inflation target set
Read more on theguardian.com
