A man for all seasons? What the Chancellor can expect in the OBR’s Spring outlook

Published on Public Finances and the Economy

  • On a number of measures, the economic outlook has brightened a little since the ‘bloodbath’ of the Autumn Budget, meaning the Chancellor is likely to receive some good news on the deficit at next week’s Spring Statement
  • But if the OBR follows the same path as the Bank of England and other forecasters, it is likely to confine its upgrades to the near-term. And we know that the living standards outlook will certainly be clouded by tax and benefit policy changes coming into effect in April – especially in the bottom half of the income distribution
  • Increased headroom on the public finances provides more space for some fiscal loosening in the near-term. But, easing pressures on public finances and working-age welfare over the longer-term would likely need to come alongside an increase in revenues. This is especially the case given the fiscal pressures associated with an ageing population