The Guardian view on OBR v the Treasury: ministers have embraced the theatre of errors | Editorial

"An outrage machine has decided that a forecast of a few billion pounds in a model that makes projections about trillions of pounds of taxes and spending is the lie of the century. We can't predict the weather next year, but apparently the public finances in 2029 can be judged with pinpoint accuracy. That's why the headlines about holes and sleaze probes are a joke. It is theatre, but it is bad theatre."

"Yet many of its accusers and defenders treat it as an allseeing oracle. In fact, the OBR, to its credit, admits that its medium-term projections are frequently wrong. It often wrongly estimates inflation and productivity, and has had its assumptions upended by unforeseen events. The OBR's 2019 five-year forecast undershot actual GDP growth by 200bn. Given this degree of error, treating a projected current budget balance of 20bn in 2029-30 as a hard fact is deeply unserious."

"The government colludes in this fiction. Rachel Reeves wasn't deceitful just not candid. Sir Keir Starmer suggested that the OBR had been overzealous in assessing UK productivity once Labour arrived in power as if civil servants had it in for the incoming government. As it turns out, the OBR has bigger problems than a bemused prime minister to deal with like having a hackable website with marketsensitive information. The watchdog paid the price its chair fell on his sword."

A media frenzy over a forecast of a few billion pounds is absurd given the uncertainty of multi-year public-finance projections. The Office for Budget Responsibility lacks moral or predictive authority and admits medium-term projections are frequently wrong, often misestimating inflation and productivity and having assumptions upended by unforeseen events. The OBR's 2019 five-year forecast undershot actual GDP growth by £200bn. Treating a projected current budget balance of £20bn in 2029–30 as a hard fact is deeply unserious. Political leaders collude with a fiscal rule aimed at soothing bond markets while the depressed UK economy makes running deficits necessary to avoid unemployment and rising indebtedness.

Read at www.theguardian.com