Key facts
- The TUC is calling for a 'root and branch' review of the Office for Budget Responsibility (OBR).
- The union argues the OBR's models assume public investment 'crowds out' private capital, hindering growth.
- The TUC wants Chancellor John Healey to use his first budget on October 28 to re-examine the OBR's assessments.
- Jonathan Haskel, a former Bank of England MPC member, has been appointed the new chair of the OBR.
- The TUC also advocates for expanding the mandate of the National Wealth Fund to encourage long-term investments.
The Trades Union Congress (TUC) is urging the new chancellor, John Healey, to initiate a comprehensive review of the Office for Budget Responsibility (OBR). The union contends that the OBR's current economic modeling, particularly its assumption that public investment displaces private capital, acts as a barrier to economic growth and investment. This critique aligns with sentiments expressed by various thinktanks and campaign groups.
Paul Nowak, General Secretary of the TUC, stated that the OBR's models are outdated and still reflect the logic of austerity, preventing the UK from entering the modern economic mainstream. The TUC proposes that the OBR's assessments should be re-examined in Healey's first budget on October 28.
Jonathan Haskel, a former member of the Bank of England's monetary policy committee, has been appointed as the new chair of the OBR. Haskel has previously expressed a more pessimistic outlook on the UK's economic future, anticipating higher interest rates and weaker GDP growth, and noting the country's "not very good fiscal position."
In addition to reviewing the OBR, the TUC is advocating for increased investment through bodies like the National Wealth Fund (NWF). They propose modifying the NWF's mandate to allow for investments with longer return horizons, up to 15 years, to stimulate growth and attract private investors. The TUC believes that leveraging existing fiscal rules, which allow borrowing for investment matched by financial assets, can support reindustrialization.
However, concerns have been raised by entities like Oxford Economics regarding the potential impact of increased borrowing on the bond market and the new administration's commitment to fiscal sustainability. A Treasury spokesperson affirmed that fiscal discipline is fundamental to economic stability and that the government will adhere to its fiscal rules, including reducing debt.