IFS’s Damning Verdict On Osborne’s Budget

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On last year’s £27 billion OBR windfall:

What Mr Osborne didn’t tell us yesterday is that rather than finding £27 billion the OBR lost £56 billion down that same sofa. As it happens, the total loss to the sofa across the two fiscal events is £29 billion.

That loss largely arises from changes in assumptions about future productivity growth feeding in to lower economic growth over the rest of the parliament. If the OBR is right about that we should all be worried. This will lead to lower wages and living standards, not just lower tax revenues for the Treasury.”

On Osborne’s golden public finance rules:

“Mr Osborne had three fiscal rules – the welfare cap; the rule which said debt should fall as a fraction of national income every year; and the rule to get to budget surplus by 2019-20. He broke his welfare cap in November, and it is now broken by a bigger margin. He told us yesterday he is on course to break his debt rule by the end of this month. The surplus rule is the last rule standing.”

On that same subject Dan Jarvis has a good line that “I’ve had goldfish that have lasted longer than Osborne’s rules”….




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Quote of the Day

The FT’s Wolfgang Munchau on the “fake maths” of economic forecasts:

“The truth is that our ability to forecast the future beyond the current quarter is limited… The curse of our time is fake maths. Think of it as fake news for numerically literate intellectuals: it is the abuse of statistics and economic models to peddle one’s own political prejudice… The fakeness of the maths lies in an exaggerated inference. Economic models have their uses, as do opinion polls. They provide information to policymakers and markets. But nobody can see through the fog of the future.”

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