New headache for Rachel Reeves as OBR expected to lower productivity forecast | Economic policy
The Budget Responsibility Office is expected to reduce the basic efficiency forecast, and Guardian puts Rachel Reeves to establish financial rules without a significant action in the budget.
The government’s independent observer has made a “stock ver during the summer of the estimation models, and the Treasury officials specially accept that the result will inevitably be a weaker growth appearance.
A Treasury source said that they expect OBR to a “kitchen sink” – to make an important downward revision at a time in efficiency forecasts instead of taking a more piece of approach.
Reeves will respond by pointing to the long -term weakness of productivity in the UK economy and promising to address it with an investment program.
However, the Oxford economy, however, estimates that Obr’s recycling of productivity estimation in accordance with less optimistic independent average projection will overthrow 1.4% of GDP at the end of its five -year forecasting period.
This will force Reeves to increase or reduce expenditures to meet the financial rules and maintain the ceiling gap of approximately 10 billion pounds. Increasing the main and higher income tax rates By 2p.
He hopes to convince the Treasury ministers to convince the government policies such as reforms planning, which he hopes to increase growth, but they are likely to be higher than the fall of productivity.
When it evaluates the ceiling gap of the chancellor against financial rules, OBR will have to take into account the additional costs of the last political U -transit, including winter fuel allowance and welfare reforms with boats.
Reeves will have to raise taxes, and when November 26, with the late budget date of November 26, opened a fiery speculation for weeks about how extra income can be increased.
It is understood that Reeves expressed disappointment in the publication of an article from the Institute of Public Policy Studies, which calls for a fall tax on banks and led to the sale of financial stocks at the beginning of this month.
Any plan for tax changes will have to pass the “Budget Board” with a skirt that aims to prevent the repetition of the angry business response that was announced last week and following the last year’s budget.
Rain Newton-Smith, General Manager of the CBI, urged the chancellor to promise not to increase national insurance, VAT or income tax instead of looking at businesses again to earn more income of Labour’s manifesto last week.
A Treasury Spokesman: “We will not speculate in the estimation of OBR. We are determined to keep taxes as low as possible for employees, so in the last budget, we have protected the salaries of employees and promised not to raise basic, higher or additional income tax, employee national insurance or coffee rates.”
