James Moore: And you thought the OBR's forecasts were meant to be right?

Click to follow
The Independent Online

Outlook Remember when the Office for Budget Responsibility was set up? There was a big song and dance about how it would provide clean and independent fiscal forecasts that would help to prevent governments from fiddling the figures, an accusation repeatedly levelled at Gordon Brown's administration – and most of its predecessors at some point.

The OBR was supposed to provide what amounts to an independent audit of the Government's tax and spending proposals, and tell us whether they stacked up based on the outlook for the economy and such like.

That forecasting is a pretty haphazard science is a well-known fact which economists don't like to speak too candidly about in case it encourages finance departments to question what they're there for.

Except that Robert Chote, the OBR's chairman, has decided to be rather more honest than some of his colleagues by admitting that the OBR's best work has been in educating the public about just how difficult accurate forecasting can be. Its forecasts have been miles off target.

It has been suggested that the Government might just as well can the OBR and use the average of all the independent forecasts out there, which you can easily get with the aid of a Reuters or Bloomberg terminal. The man who made that suggestion was Mr Chote, before he got his current job. It's not as if the OBR has access to any information that the rest of them don't have.

Ah but here's the thing, says Mr Chote; the problem with doing that, as he's discovered, is that we apparently need a particular type of prediction to product a fiscal forecast which isn't available off the shelf. They've had to tweak the methodology of that forecast, but just to be clear, they've absolutely, positively not been leaned on: one tweak favours George Osborne and the Government, the other doesn't.

Even though, when the next set of numbers come out, they'll have to be treated not just with a pinch of salt but with several bags full.

Forecasting's jolly tough, you know. The OBR's central one is still that overall borrowing should fall by about £1bn this year. But Mr Chote says it might increase by £15bn. It might also fall by £15bn and the only thing you can really be sure of is that the latter figure will only be true in Mr Osborne's dreams.