What do the OBR forecasts really tell us?
Yesterday’s budget was meant to put Britain back on the path to growth and recovery. The Office of Budget Responsibility (OBR) has set out in its forecasts what that path might look like. As the government’s watchdog on public finances, its primary function is to ensure that the government is meeting its fiscal mandate during this period of austerity. But as the governments’ fiscal target is to eliminate the structural deficit by 2016/17, one of the key judgements they are required to make is the size of the output gap. The output gap reflects the underlying capacity for the economy to grow without giving rise to inflation, debt imbalances or other factors that could cause a subsequent correction in the future. And the size of the output gap is a key judgement for the OBR, because as it determines how much of the deficit is cyclical and how much of it is structural, it has important implications for the government’s fiscal target.
Hiba Sameen
22 March 2012
Cities in the Autumn Statement – Plenty of investment, not much innovation
The Coalition has always towed a pretty consistent line on geographic re-balancing in the UK: we need to become less dependent on the South East, and spread growth more evenly around the country. The message from today’s Autumn Statement was no different – the Chancellor announced a series of measures that aim to boost prosperity around the UK.
Andrew Sissons
29 November 2011
Finance for high growth firms: EIS and beyond
Brussels has given the Treasury the go-ahead to expand the Enterprise Investment Scheme (EIS). By reducing the tax investors pay when backing high-risk companies, it’s designed to increase investment in them. The government argues the scheme will create more high growth firms: the seven per cent of firms who create half of all new jobs.
Neil Lee
28 September 2011