Skip to main content

Is the OBR too gloomy?

Given the persistently disappointing performance of productivity, it is entirely understandable that the Office for Budget Responsibility (OBR) decided in this week’s Budget to adopt more pessimistic assumptions about its future behaviour. What’s more, we cannot rule out the possibility that even the new forecasts will turn out to be too optimistic as well. But we think it more likely that the OBR’s new forecasts will prove to be too pessimistic. Not only does the sheer magnitude of the forecast changes seem hard to justify on the basis of the limited additional information available since March, but there are some more fundamental reasons to think that productivity growth is likely to grow a bit more quickly than the average rates of 1% or so that the OBR now predicts. This could have important consequences for the public finances.

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to gain:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services


Get access