Chancellor Osborne has established a new independent Office for Budget Responsibility to provide a truly independent assessment of the state of the nation’s finances.
It will be headed by Sir Alan Budd, one of the most respected fiscal and macroeconomic experts in the country and joined by two other independent experts Geoffrey Dicks and Graham Parker.
Together they will form the Budget Responsibility Committee. With help from a secretariat of civil servants, they will be in charge of making independent forecasts for the economy and the public finances. The OBRC will produce the fiscal numbers that underpin government policy in the Budget Red Book.
The Treasury has been asked to give Sir Alan Budd and the Committee full access to all the data, assumptions, and economic models.
“For the first time we will have an independently audited and transparent national balance sheet. That means there will be nowhere to hide the debts, no way to fiddle the figures, and no way of avoiding the difficult choices that have been put off for too long.”
With all these changes, fiscal policy in this country will be at the cutting edge of international best practice with an independent fiscal agency that produces official fiscal and economic forecasts.
The UK may well be at the cutting edge of international practice but will the OBRC be any more accurate than any of the forty forecasting institutions tracked by the Treasury. I first met Alan Budd at London Business School when there was great excitement about the LBS model of the economy developed by Jim Ball and Terry Burns. This was in the 1970’s and the model ran on a computer the size of a peanut by todays standards. We played golf and played with the model it was all very slow.
It was a Hewlett Packard 3000. The model came as standard with 256 Kb of memory, expandable to 1 Mb and could support up to 32 terminals at a cost of some £70,000. It was a very, very exciting time. Imagine 256 Kb on one machine shared by up to 32 users!
In the past thirty years, computer speeds, capacities and golf games have moved on at tremendous pace. The economic models on the other hand have had a more limited success. The Office of Budget Responsibility Committee has a tough challenge to fulfill.
Obladi OBR forecast on yeah, [with apology to the Beatles].
Economic Policy and the Tiger Woods PGA Tour. JKA
Speech by the Chancellor of the Exchequer, the Rt Hon George Osborne MP, on the OBR .
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The views expressed are my own and in no way reflect pro.manchester policy. In no way should the comments be considered as investment advice or guidelines. UK Economics news and analysis : no politics, no dogma, no polemics, just facts.