Chancellor George Osborne has defended the Office for Budget Responsibility after it was suggested its economic forecasting was too unreliable to base policy on.
Earlier this week Capital Economics managing director told the Treasury select committee that Government should question the extent to which it relies on OBR projections to develop policy.
Giving evidence to the committee today, Osborne said getting forecasts exactly correct is almost impossible but that the OBR was an important move towards independent forecasting.
He said: “I have created the OBR in order to give Government, Parliament and the country the best independent estimate of what is happening to the British economy and what will happen to it in the future. I am not annoyed it downgraded forecasts. Forecasting is never going to be something you get 100 per cent right, it is impossible.”
Osborne also told MPs the Budget will be held on March 21 and that the Government will respond to the Independent Commission on Banking’s report on December 19. He will respond to the TSC’s report into the accountability of the Bank of England after the draft financial services bill committee reports on December 16.
In his evidence to the committee earlier this week, Bootle warned that if the OBR had to downgrade projections again it could seriously undermine its credibility as a forecaster and lead the Chancellor to consider its future.
He said: “There is no certainty at all in the OBR’s projections. Forecasting is extremely difficult at the best of times and we are at a particularly difficult juncture at the moment. It is not so much the OBR has not got things right that is worth noting, but the question to what extent should anyone be basing policy on what the OBR or indeed what anyone else, is forecasting?”