The Office for Budget Responsibility (OBR) faced significant turmoil on Monday after a leak of its economic forecast, which was attributed to a technical error. This incident marked what OBR chair Richard Hughes described as the “worst failure in the 15-year history” of the fiscal watchdog. The leak occurred shortly before Rachel Reeves, the Shadow Chancellor, was set to present her Budget, leading to heightened scrutiny of the OBR’s processes.
In the wake of the incident, Hughes resigned, stating that his departure would allow the OBR to “quickly move on” from the controversy. The fallout from the leak has intensified, with members of the OBR’s committee anticipated to appear before the Treasury Select Committee later today. This development adds another layer of complexity to the ongoing discussions surrounding the Budget.
During a speech on Monday, Sir Keir Starmer, the Prime Minister, criticized the OBR, labeling the leak a “massive discourtesy” to Parliament. Starmer also expressed his bemusement regarding the timing of a productivity review that resulted in a £16 billion downgrade for the government. He questioned why such a review was not conducted at the conclusion of the Conservative government’s tenure, suggesting it would have been more prudent to release it at that time.
Despite the political drama, gilt yields remained relatively stable throughout the day, even as Starmer faced accusations of misleading the public about the state of public finances. The upcoming sessions with the Chancellor and OBR before the Treasury Committee are poised to introduce further complications to what has already been described as a soap-opera Budget.
As the situation continues to evolve, a number of other significant stories are also developing. Among them are voter concerns regarding tax hikes, the impending closure of Zipcar UK operations due to a new London electric vehicle congestion charge, and the abandonment of a blockbuster merger following shareholder backlash. Banks are also preparing for potential benefits from the loosening of capital rules, adding to the dynamic financial landscape.
Stay tuned for further updates as we continue to monitor these unfolding events.
