Never forget...

[albie]

The OBR was created by George Osbourne to lock in bias towards neo liberal economics, precisely to limit political opponents moving on from the privatisation fetish.

It is no more "independent" than the Bank of England in its application of key assumptions to manage inflation, for example.
Brown created that independence, Osbourne ran with it, and now Reeves is promising austerity with her ludicrous "fiscal rules" scam.

No wonder George Osbourne is thrilled to big up Team Keith for blowing his horn;
https://nitter.net/pic/media%2FF6paedcXQAA5wBd.png%3Fname%3Dsmall%26format%3Dwebp

There you have the neo liberal consensus in a nutshell!

[BillyStubbsTears]

Albie

I'm sorry but that is utter nonsense.

The OBR exists to consider the effect of Govt policy on the fiscal position of the country. There's nothing "neo-liberal" about having to balance the books over the long term. It's got sweet FActo do with privatisation.

Christ knows I've enough criticisms of Osborne's policies to fill a filing cabinet, but in creating the OBR, he was broadly right. It's absolute ignorance of basic economics to think you can ignore fiscal balance and have a long term healthy economy.

That was precisely the almighty f**k up that Truss and Kwarteng visited on the country. Your rant against the OBR puts you in their team.

[RobTheRover]

What a silly Mare, I hope someone gave her both Barrels!

She might well be silly. What does that make the great number of Tory MPs and members that elected her?

Racists?

[albie]

BST,

You are confusing the issue of "balancing the books" with the demands of the political cycle.
If you believe that governments have to "balance the books over the long term", I'm afraid you do not understand modern economics, or the banking industry.

There is no valid economic reason that the fiscal position needs to cycle in parallel with the electoral timetable.
It is perfectly possible to take the view that a budget deficit beyond a parliament is desirable to encourage major infrastructural updates, to give one example.
To make an artificial timescale the determinant of an investment strategy is to miss the opportunity to speed structural reform.

I have no issue with the OBR giving a view, but it should not be a limitation on policy implementation if the need is demonstrated.
The OBR has not accurately predicted the financial implications of massive cost over-runs in relation to Hs2 or the Hinkley nuclear project.
The overall contribution of these projects to the national accounts is large, and spans across different administrations.

I have pointed out before that the requirements of an economy in a climate breakdown scenario means that the conventions of the neo liberal economy should be rejected.
There are a number of assumptions behind the OBR that do not address the fundamental realignment of the economy required.

The idea that business as usual responses will be sufficent is optimistic to the point of myopia.

[BillyStubbsTears]

If you believe that governments have to "balance the books over the long term", I'm afraid you do not understand modern economics

This is the precise equivalent of saying "if you believe that you shouldn't jump off a cliff because you'll die, I'm afraid you do not understand the modern theory of gravity".

What on EARTH are you trying to say here? That a Government can run a deficit in perpetuity? 

That was precisely Liz Truss's economics.

[albie]

BST,

You have not understood the position Labour are taking, as well as how the economy works.

Reeves is saying that Labour will be bound by the OBR recommendations, having set the fiscal rules which the OBR use as a foundation benchmark.
As the fiscal rules are themselves arbitrary, and in the view of many misplaced, the result is error squared.

All the OBR is enabled to do is advise on the liklihood of achieving financial objectives which may be themselves questionable.
Their work is a probability assessment with uncertainty bounds, rather than policy guidance.

The OBR speaks to the relationship between levels of public debt and GDP, on matters that have a predictable cost profile.
Two points:
1) GDP is not a relevant metric when considering climate impacts on the UK economy.
2) Public debt needs to be framed alongside the issue of private debt.

Yes, a government can run a level of public debt over a longer time frame. if the confidence of the investors is maintained.
This is not to be confused with Truss, who lost that confidence through reckless policy intentions.

Short term demands pop up requiring prompt action, long term interventions extend beyond the set time frame and into unknown borrowing cost territory.

Do you think an investment decision outside the matters considered by the OBR is a reasonable response to a crisis like the RACC problem?
Doing so because the problem is live and needs resolution, rather than because the cost of remediation is supported by the low cost of borrowing.

[BillyStubbsTears]

Albie.

You had a rant about the OBR that was shot through with mistakes and misunderstandings. You've now doubled down on that.

The OBR doesn't give any advice. It isn't guided by any Govt policy, or Govt imposed fiscal guidance. IT models what the likely effect will be of Govt policy. In modelling the likely effects, it uses methods which, while not perfect, are among the best we have.

The point is that the Govt then cannot do what you and so many on the Left do, which is to airily ignore the economic consequences of policy decisions. It can be held to task. Not by the OBR, because the OBR has no executive authority. By the country.

Yes, we have a climate crisis. But that doesn't mean the basic rules of economics don't apply. IF we are going to spend the money we need to do to address that, we need to make that decision in the full, clear knowledge of what the consequences will be for our economy. It is the role of the OBR to try to predict that. Nothing more, nothing less.

The markets hammered the UK this time last year precisely because we had a PM and Chancellor who thought they could ram through a massive reduction in Govt tax take, whilst cutting the OBR out and refusing to have their assessment of the effect of this on the fiscal position. Be honest. You would like a left Government to do the same. Fortunately, the sort of Govt you wish to see will never, ever come to pass. Even the Corbyn-led Labour party understood that fiscal books have to be balanced over the cycle.