Friday briefing: After constant leaks and a resignation, is the OBR still fit for purpose?
Good morning. The Office for Budget Responsibility (OBR) was designed to be an institution that crunches numbers quietly in the background. Instead, over the past week, it has found itself dragged kicking and screaming into the political spotlight. On the day attention should have been fixed on Rachel Reeves’s economic plans, many instead watched the fallout from the OBR’s accidental early publication of her budget. After the leak there followed days of anger and disbelief, which culminated in the resignation of the OBR’s chair, Richard Hughes. This uproar followed months of briefings and separate leaks about the OBR in the run up to the budget, painting a picture that the forecasts were fluctuating wildly, and the treasury was trying to respond to these swings, making the budget process far more chaotic. The OBR’s David Miles later told MPs that these briefings were not only wrong, but the volume and inaccuracy of these leaks were so serious the watchdog feared for its reputation. Now, as the search begins for a new figure to lead one of the most powerful and thankless institutions in British economic life, a sharper question is being asked, largely from the left. Is the OBR still fit for purpose, or has this episode exposed a case for abolishing it altogether? To explore the case for and against, I spoke to Heather Stewart, the Guardian’s economics editor. That’s after the headlines: Five big stories UK news | Vladimir Putin is “morally responsible” for Dawn Sturgess’s novichok death, an inquiry has found. Sturgess died after spraying herself with a nerve agent smuggled into the UK by Russian agents. UK politics | A group of Holocaust survivors have demanded Nigel Farage tell the truth and apologise for the antisemitic comments that fellow pupils of Dulwich College allege he made toward Jewish pupils, as the Reform leader turned on broadcasters for questioning him about the growing scandal. Eurovision | Ireland, Spain, Slovenia and the Netherlands will boycott next year’s Eurovision after Israel was given the all-clear to compete in the 2026 song contest despite calls by several participating broadcasters for its exclusion over the war in Gaza. UK politics | Lord Evans of Watford, suspended by the House of Lords for breaking lobbying rules after a Guardian investigation, is now facing claims that he received at least $1m (£760,000) in an allegedly corrupt deal. US news | The New York Times is suing the US defense department and the defense secretary, Pete Hegseth. The lawsuit argues restrictions imposed by the Trump administration violate free speech protections. In depth: ‘Even in normal times, economic forecasts are just not very accurate’
The OBR was first created as a public body in 2010 by the Conservative and Liberal Democrat coalition government, in the aftermath of the global financial crash. It was a time when Britain’s public finances were under intense scrutiny (remember that infamous ‘there’s no money left’ note?). The then chancellor, George Osborne, made a political case that former prime minister Gordon Brown had wrecked the UK economy by spending too much money. Many were persuaded. But, Heather Stewart argues, it was politically expedient for the coalition government to lay the blame for Britain’s economic problems solely at Labour’s door, while sidelining the central role of the global financial crash. This argument was necessary to justify the tough medicine being offered by the coalition government: austerity. Part of the Conservatives’ case was that Gordon Brown had massaged the figures during his time in office, producing optimistic forecasts that dressed up the state of the economy, Heather explains. To prevent this happening again, Osborne announced that the forecasts underpinning each budget would be handed to an independent organisation. “There’s a funny dance between the Treasury and the OBR because the Treasury can only publish a budget if the OBR says the sums add up,” Heather says. “So if the Treasury says ‘we might do this’, the OBR might say ‘that’ll bring in this amount, but it might slow growth’; it has this effect and you go back to the drawing board. So, it’s an external watchdog, but it works very closely with the Treasury.” *** How accurate are these forecasts? The OBR is obliged by law to publish two forecasts a year. These are notorious for their inaccuracy but, as Heather tells me, that is not necessarily the OBR’s fault. She pointed to the succession of economic shocks no one saw coming after the coalition years: Brexit, Covid, and Russia’s invasion of Ukraine, which sent energy prices soaring. “Even in normal times, economic forecasts are just not very accurate. So it’s not that the OBR is particularly rubbish, it’s just that it’s really difficult forecasting the economy,” Heather says. Can the chancellor simply ignore these forecasts? In theory, yes, but politically, it is far more complicated. Heather pointed to this year’s spring statement, when the OBR told Rachel Reeves she would fail to meet her fiscal rules in five years’ time. Technically, Reeves did not have to respond immediately. “But she felt she had to respond to it, she had to show she was going to meet the rules and in fact implemented welfare cuts that then infuriated Labour MPs and had to be reversed,” Heather says. So why doesn’t Reeves just ignore the OBR? Heather says two forces currently restrain the chancellor from doing so: the country’s high national debt and high borrowing costs, the latter of which is determined by the bond markets. “Reeves will have felt that if she ignored the OBR, that might cause a sell off in the bond market and that would make borrowing costs go up. That would be reminiscent of the Liz Truss period, who decried the OBR as part of the establishment plot holding back growth and tax cuts. Truss did her mini budget without a forecast from the OBR and we remember how that ended,” Heather says. Labour MP Andy MacNae has called for the OBR to produce just one forecast a year, likening its predictions to weather forecasts. While the watchdog has resisted this idea, and doing so would require a change in the law, Heather explains Reeves will implement some small, yet notable changes. The OBR will still publish two forecasts a year, but from next spring Reeves has said its assessment will no longer be used to judge her against her fiscal rules. Instead, it will set out what the budget balance is expected to be over a set period, without issuing a formal pass-or-fail verdict. *** Is the OBR right wing? There is also criticism that the OBR is too conservative in its forecasts. “There are left-wing economists who say it was basically set up by Osborne to rubber stamp austerity,” Heather says. One of the most prominent critiques comes from the New Economics Foundation, which argues the watchdog does not give sufficient weight to the benefits of public investment. The group says the OBR relies too heavily on the idea of “crowding out”; the assumption that increased public spending causes the private sector to retreat, Heather explains. The New Economics Foundation has also warned that the current system “privileges the OBR with a power that has received little democratic scrutiny”. The organisation has called for forecasting to be taken back into the Treasury, with an external Office for Fiscal Transparency acting more as a quality check and the chancellor making the final decision. Labour MP Jeevun Sandher, who is an economist, has gone further, arguing that the OBR is stuck in a ‘doom loop’ because of its central assumption that public spending cuts do not significantly reduce growth. “There is definitely a worry that the OBR doesn’t give enough credit to public spending and the impact that’s likely to have. Having said that, they’ve just had to revise their forecast because they’ve been systematically too optimistic about productivity, which is one of the big determinants of growth,” Heather says. *** Should the OBR be abolished? The Labour government is keen to project the idea that its economic decisions are grounded in people’s lives, not just the numbers. That message rang hollow, however, after the turmoil that followed the spring statement. Heather recalls an interview she did with Liz Kendall, then serving as pensions secretary, who was adamant that impending welfare cuts were based on wanting to help people, rather than to meet targets. “But it was really clear they had started from a spreadsheet and it was basically an OBR spreadsheet,” Heather adds. “The focus was on how do we meet this target; which package of reforms could we do? And that is a really, really bad way to make policy.” Still, Heather warns there would be consequences of scrapping the OBR, on the admittedly dull but immensely powerful bond markets. “We’ve got to look credible to these investors. If you say we’re going to scrap this institution that checks our homework, I would say it’s not sending a great signal at this particular point in time.” She also questions whether abolition would be as revolutionary as it sounds. “They are only economic forecasters,” she says. What often goes unspoken, says Heather, is that chancellors set their own fiscal rules in the first place. While much has been written about how tightly Reeves has constrained herself with hers, in the end the decision to change them still rests with her – as does when to heed a forecast, and when to hold course. What else we’ve been reading
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Football | Aitana Bonmatí has been voted the best female football player on the planet by our panel of 127 experts, ahead of Mariona Caldentey and Alessia Russo. Formula One | Lando Norris says he would not want McLaren to have to use team orders to aid him in winning his first world championship at the season finale in Abu Dhabi this weekend. Football | Ahead of tomorrow’s draw for the World Cup 2026 we analyse the worst-case scenarios for England, Scotland, USA and Australia. Something for the weekend Our critics’ roundup of the best things to watch, read, play and listen to right now
Music Dove Ellis: Blizzard | ★★★★★ With shades of Jeff and Tim Buckley, Galway-born indie engima Ellis writes tunes so strong they feel like old friends. On his glorious debut album, which arrives with no biographical notes, Ellis’s remarkable vocals can settle into a dreamy falsetto so fragile he could be dancing on a pin, and then suddenly perform a handbrake turn into intensity, even anger. The way the arrangements (including saxophone and drums) dart around his voice in ornate little counter-melodies recalls fellow Irishman Van Morrison, and recent single To the Sandals noticeably nods to Joan Armatrading’s Love and Affection. The 22-year-old’s lyrics frequently seem to flutter between hope and despair, before building to a purifying conclusion. Dave Simpson TV What’s the Monarchy for?: David Dimbleby | ★★★★☆ Dimbleby’s demolition of the royals is hugely entertaining. The opening episode cleaves closest to the titular question – parts two and three are more like “Is the Monarchy a Giant Ponzi Scheme?” and “Are the Monarchy Personally Repellent?”, respectively – examining the power the monarchy has and how it wields it. Much of the hour is spent trying to ascertain whether King Charles influences government policy by advocating for his own beliefs. He certainly has the ear of politicians: the prime minister takes weekly trips to Buckingham Palace, while nobody interviewed denies that the king’s letters are routinely placed at the top of the relevant minister’s pile. Dimbleby ably drives a cart and horses through sophistry from Dominic Grieve, who during his time as attorney general refused a freedom of information request from the Guardian to publish Charles’s letters. Jack Seale Film It Was Just An Accident: Jafar Panahi | ★★★★☆ Jafar Panahi, the veteran Iranian auteur and democracy campaigner, who continues to be arrested and imprisoned and to defy the law, finding loopholes so his movies can be made and shown abroad, brings us a story of state violence and revenge. A man driving at night with his heavily pregnant wife and young daughter hits a dog with his car. What follows is a grotesque, almost dreamlike sequence of scenes in various locations, including a remote desert with a tree that local hothead Hamid says looks like a stage-set for Waiting for Godot. The plot twists and turns are startling, almost unreal; can it be true that normal people like this can countenance violence? But if that seems implausible, perhaps that is because we don’t grasp the violence through which they have already lived. Peter Bradshaw Art Saodat Ismailova: As We Fade | ★★★★★ Be prepared to have your heart stop on entering Ismailova’s first solo show at Baltic, Gateshead. The Uzbek artist and film-maker has created an exhilarating, terrifying and unforgettable show. The room is dark. Four works are arranged around a padded black square in the centre for sitting or lying on – a reference to the void, something Ismailova has been fascinated with for two decades. She grew up during perestroika, a period of widespread political, social and economic reform in the late 1980s, when Soviet ideology began to collapse leaving a void in the culture. The four works sing to each other; they crackle, scream and collide. It is elemental – images of fire, ice and cascading currents of water recur, while you can almost feel the sand whipping the back of your neck as you listen to the desert wind. Charlotte Jansen The front pages
The Guardian leads with “Farage hits out as fresh claims of ‘vindictive’ teenage racism emerge”. The Mail goes with “Farage’s ‘It Ain’t Half Hot Mum’ attack on BBC double standards”. The Financial Times reports “Expat entrepreneur’s record £9mn gift thrusts Reform into fundraising lead”. The i quotes Liz Kendall with “‘Ignorant’ to call Labour the party of welfare, claims Cabinet minister”. The Telegraph leads with “Lammy breaks ranks on Brexit”. The Times reports “Deal to give frozen £8bn from Russia to Ukraine”. The Mirror looks into an inquiry into the 2018 Salisbury poisonings with “Dawn’s blood on his hands”. Finally the Sun leads with comments from a former MasterChef judge: “John Torode: I’m in therapy over TV axe”. Today in Focus
The World Cup’s Maga makeover Guardian sportswriter Jonathan Liew on how football went about courting Donald Trump – and how it might regret it when the World Cup comes to the US next summer. Cartoon of the day | Ben Jennings
The Upside A bit of good news to remind you that the world’s not all bad
He was the first scientist to dive at the north pole, has taken a Prince and prime minister under icy Arctic waters and helped to locate the wreck of the Titanic. At 88, the famed undersea explorer, Dr Joe MacInnis, once described as a “rip roaring, life loving” young Canadian, has decades of adventures to share: the time he and a Russian explorer, Anatoly Sagalevich, were trapped two and a half miles below the surface by a wayward telephone wire from the Titanic, or when he was part of the team that first filmed narwhal, bowhead and beluga whales underwater. Now the physician says that working alongside pioneers like Jacques Cousteau and Robert Ballard, looking to push the limits of human possibility, has given him a relentless optimism and hope. Sign up here for a weekly roundup of The Upside, sent to you every Sunday Bored at work? And finally, the Guardian’s puzzles are here to keep you entertained throughout the day. Until tomorrow. Quick crossword Cryptic crossword Wordiply
