OBR's Productivity Cut: £20B Budget Hole, Tax Hike Equivalent

The Office for Budget Responsibility (OBR) is set to slash its productivity growth forecast, potentially leaving a £20 billion gap in the Chancellors budget plans. This revision, due to a technical adjustment in economic output prediction, could force the Chancellor to find substantial funds, possibly through tax increases. The OBRs previous optimism on productivity growth, compared to other institutions, has strained relations with the Treasury. However, a recent adjustment in the data window for market interest rates offers some relief, saving the Chancellor around £1.7 billion in projected interest expenses. This situation underscores the significant impact of the OBRs decisions on government finances and policy decisions.The Daily News Now! — Every city. Every story. AI-powered. Hosted on Acast. See acast.com/privacy for more information.