The Office for Budget Responsibility (OBR) faced a significant crisis following a major leak of its economic forecast on March 15, 2024. This leak occurred just before Rachel Reeves, the Shadow Chancellor, presented her Budget to Parliament, marking what the OBR described as its “worst failure” in its fifteen-year history. An inquiry revealed that the leak stemmed from a technical error.
In response to the fallout, Richard Hughes, the OBR’s chair, announced his resignation, stating that it would allow the organization to “quickly move on” from the incident. The resignation adds to the ongoing scrutiny of the OBR, with its committee members scheduled to appear before the Treasury Select Committee later today.
Political Repercussions and Criticism
During a speech on March 15, Prime Minister Sir Keir Starmer criticized the OBR, labeling the leak as a “massive discourtesy” to Parliament. He also questioned the timing of the productivity review, which resulted in a £16 billion downgrade for the government’s financial outlook. Starmer expressed his confusion as to why the review was not completed at the end of the Conservative Party’s tenure, suggesting it would have been “sensible” to do so.
Despite the political turmoil, gilt yields remained stable throughout the day, even as Starmer faced allegations of misleading the public regarding national finances. The upcoming sessions with the Chancellor and the OBR before the Treasury Committee are expected to introduce further complexities to what has already been a turbulent Budget discussion.
Broader Economic Context
The controversy surrounding the OBR comes at a time when various economic indicators are being closely monitored. Other recent headlines include the abandonment of a high-profile merger within the FTSE due to shareholder backlash, as well as the impending operational shutdown of Zipcar UK in response to the new London Electric Vehicle Congestion Charge.
As these developments unfold, markets and voters alike are keenly observing the implications of the Budget and the OBR’s role in shaping economic policy. The political landscape remains charged, with implications for the government’s credibility and financial management.
As the situation develops, updates will continue to bring insights and analysis regarding the OBR and its impact on the broader economic environment.
