The Treasury has published its monthly comparison of independent economic forecasts, and the numbers massively undercut the OBR’s forecasts. When is the OBR ever right…
The June edition, compiled by the Treasury’s own Macroeconomic Conditions and Risk Team and posted on gov.uk, collects the latest predictions from 20 City and independent forecasters. They expect CPI inflation to hit 3.7% by the end of 2026. The OBR’s March forecast had inflation back at its 2% target by then, a precise 1.9%. Today’s predicted number is nearly double that…
The growth picture is obviously no better. Forecasters put 2026 GDP growth at 0.9%, below the OBR’s 1.1%, and have trimmed their 2027 call to 1.0%, against the watchdog’s 1.6%. They also see the Bank Rate stuck at 3.8% by year-end, above the 3.3% the OBR’s March forecast assumed. In other words, don’t expect any rate cuts. All of this is still technically a headache for Rachel Reeves, although it may soon be someone else’s problem once Burnham returns…
Andy Haldane, Burnham’s recent adviser on the economy who has not taken up a No10 job, told Andrew Marr on LBC:
“The market now suspects that this is a traditional tax-and-spend socialist government with better TikTok videos…
imposing windfall taxes on oil & gas or on banks or upping capital gains tax would […] repeat the mistake that Rachel made […] The Achilles heel, the fiscal Achilles heel of this government thus far has been its unwillingness and/or inability to cut public spending.”