UK PM Liz Truss meets fiscal watchdog in attempt to calm fears

PTI, Sep 30, 2022, 6:23 PM IST

Image credit: Twitter / @trussliz

London: British Prime Minister Liz Truss and her finance minister Kwasi Kwarteng on Friday met the head of the country’s independent fiscal watchdog in an attempt to calm financial markets following a week of turmoil over the longer-term fallout from the government’s one-week-old mini-budget.

The Office for Budget Responsibility (OBR) confirmed it would deliver an initial forecast to Chancellor Kwarteng next week after the talks.

However, it ruled out the public release of its independent analysis and costing of the government’s fiscal policies before a detailed government fiscal review is scheduled for release on November 23.

“We are going to be providing the Chancellor with an update next Friday, and we will set up a timetable for our forecast process next week,” OBR Chair Richard Hughes told reporters after the meeting at Downing Street.

The OBR asserted that its analysis “will, as always, be based on our independent judgment about economic and fiscal prospects and the impact of the government’s policies”.

It follows widespread criticism of the government’s decision to not publish an OBR forecast alongside last week’s mini-budget, which experts believe could have avoided some of the turmoil in the financial markets over what was perceived as unfunded tax cuts to be paid for through large government borrowing.

“This morning the Prime Minister Liz Truss and Chancellor Kwasi Kwarteng met with the OBR’s Budget Responsibility Committee, including the Chair Richard Hughes, at No. 10 Downing Street,” the UK Treasury said in a readout of Friday’s important meeting.

“They discussed the process for the upcoming economic and fiscal forecast, which will be published on November 23, and the economic and fiscal outlook. They agreed, as is usual, to work closely together throughout the forecast process and beyond,” it said. “The Prime Minister and Chancellor reaffirmed their commitment to the independent OBR and made clear that they value its scrutiny,” it added.

The OBR was set up by the government in 2010 to provide independent analyses of the UK’s public finances.

It has a statutory requirement to provide two forecasts a year, and said it offered Kwarteng one on his first day as Chancellor earlier this month.

But the Chancellor reportedly did not commission one, and the lack of analysis on the measures outlined in his mini-budget financial statement is thought to have contributed to the chaos in the markets, which saw the pound tumble against the dollar, the Bank of England step in to buy the country’s long-term debt and the mortgage market withdraw lending offers to homebuyers.

The fallout continues to have political repercussions, with the Opposition Labour Party surging to record leads over the governing Conservative Party in multiple polls.

A YouGov/Times poll placed Labour 33 points ahead of the Tories, believed to be the largest lead for Labour in any recorded poll since 1998 – when the-then Labour Prime Minister Tony Blair was enjoying his most popular phase in the country.