Jul 18, 2024
New law aimed to prevent repeat of Truss mini-budget
The law will mean the OBR, which independently monitors and checks the UK government's financial plans, will have the power to make an assessment on announcements over the course of a financial year, which make permanent tax or spending commitments worth more than 1% of the size of the UK's economy, or around £30bn. If the government wanted to announce significant economic measures but did not ask for an OBR forecast on the plans, a "Fiscal lock would be triggered", the Treasury said. Since leaving Downing Street, Ms Truss has accused the OBR of belonging to an "Economic establishment" that is too pessimistic about the potential benefits of tax cuts on the economy. Chief economist at Capital Economics, said he believed the new law "Just formalises the current situation that the government needs to give the OBR enough notice and that the OBR is responsible for costing policy changes and judging whether the fiscal rules are being met or not."I don't think it means the OBR has too much power. "Ironically Liz Truss and Kwasi Kwarteng did more to burnish the credentials of the OBR than any politicians since its inception. As things stand, the OBR is now more commanding than ever," he added.
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