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Government should allow OBR’s economic forecast at mini-budget, MPs told

T

he Government should not announce major tax cuts without an independent economic forecast from the Office for Budget Responsibility, the head of a major economic think tank has warned.

The Chancellor is set to announce tens of billions of pounds both of increased spending and of tax cuts on Friday morning.

But the Government is not allowing the OBR to make the forecasts that it usually publishes alongside a budget.

Torsten Bell, the chief executive of the Resolution Foundation, said it is “almost inconceivable that any reasonable forecast from the OBR wouldn’t show debt rising throughout the forecast period.”

Speaking to MPs on the Treasury Select Committee he also criticised the Government’s decision to tie the OBR’s hands.

“It is not a good idea to be announcing large, permanent tax cuts, without an underlying economic forecast,” he said.

He also said that Jacob Rees-Mogg was wrong to say that the OBR “has always been wrong.”

Forecasts are always uncertain, because not everything can be predicted, he said.

“The country is making better economic policy decisions because (the OBR) exists,” Mr Bell told MPs.

“Does it get everything right? No. When we disagree with them they will say so … that’s what good old-fashioned liberal debate involves.”

The idea that it’s suddenly going to spur this huge revival in economic growth I find difficult to believe

Meanwhile Neil Shearing, the chief economist at Capital Economics, said that the cuts in national insurance and corporation tax, which are expected to come in the budget, will not grow the economy much.

“I think the framing of this has been slightly skewed actually. We’ve come off the back of 15 years of cripplingly low growth,” he told MPs.

“What these tax cuts do is take tax rates back to where they were 18 months ago when growth was really low.

“So the idea that it’s suddenly going to spur this huge revival in economic growth I find difficult to believe.”

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