Economic forecasts make nonsense of Tory policy – but will be used to hammer the poor again

Chancellor of the Exchequer Philip Hammond recently said public sector workers like nurses were overpaid, according to a Cabinet leak. So he probably won’t shed tears over an economic forecast that could allow him to postpone easing the cap on their pay that has sent them to food banks to make ends meet.

Commentators like the Financial Times would like to say government plans are going sideways because of “weak economic forecasts”, but the fact is they were always rubbish.

Tory deficit reduction ideas that involve squeezing the poor rather than expanding UK productivity and economic output were never going to work. That’s never – not a few years after they predicted.

Today we found out that the Office for Budget Responsibility has been over-optimistic in all its productivity forecasts for the seven years since it was formed by David Cameron. Some of us aren’t surprised at all.

But here’s a thought:

Isn’t it curious that these facts are only acknowledged when the government is being asked to ease austerity, cut student debt and build houses?

It’s almost as though someone is letting the information trickle out only in order to stop politicians from helping the poor and vulnerable and keep them in line, helping only the very rich instead.

Isn’t it?

Philip Hammond is facing what officials describe as “a bloodbath” in the public finances in his Budget next month as weak economic forecasts derail the government’s plans.

As much as two-thirds of the £26 billion of headroom in the public finances that the chancellor created last year as a buffer for the economy through the Brexit period is likely to be wiped out after the government’s fiscal watchdog concludes its forecasts for growth have been too optimistic.

The Office for Budget Responsibility will publish on Tuesday a new analysis suggesting it has persistently over-estimated Britain’s productivity over the past seven years and will give a broad hint that it will rectify the situation with a more pessimistic Budget forecast.

Slower growth in the forecast will limit deficit reduction and cut the size of the war chest that Mr Hammond put aside to smooth the Brexit transition. This leaves him in an awkward position politically, because he is under increasing pressure to end the austerity cap on public pay, lower the burden of debt on students and build houses.

The situation will dismay the Treasury and surprise economists, who have been encouraged by a steady improvement in Britain’s monthly public finances figures, even as economic growth has slowed this year. In August, the UK posted its lowest budget deficit since before the financial crisis, borrowing a net £5.7bn, well below the consensus estimate of £7.1bn.

Source: ‘Two-thirds’ of Hammond’s £26bn Budget war chest faces wipeout

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2 thoughts on “Economic forecasts make nonsense of Tory policy – but will be used to hammer the poor again

  1. Zippi

    Yet Jeremy Corbyn and John McDonnell have been poo-pooed, repeatedly, even by poorer member of the public! When will people wake up to the fact that the Tories have always been economically irresponsible, and clueless, except when it comes to filling their pockets and the pockets of those like them at our expense? Ever?

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