Fiscal risks report

Last week, the OBR published their second fiscal risks report – 294 pages of detailed economic analysis on risks to the UK public finances. 

I am assuming that you will have read it all by now, but on the off-chance you haven’t, can I point you to this (much briefer) ICAEW summary instead?

As I say in the summary:

“The OBR highlights the continuing vulnerability of the UK public finances to economic headwinds and policy risks. Both revenue and spending are under increasing pressure as the population grows older and productivity stubbornly refuses to improve.

The report stresses the short-term risks to the public finances arising from Brexit or a potential global recession, with the ‘mild’ no-deal scenario presented by the OBR suggesting a significant hit to the public finances in the order of £30bn a year, before considering potential policy responses that could cost even more.

Perhaps more concerning is the OBR’s observation that austerity fatigue is leading to a fiscal loosening and less ambitious objectives for the management of the public finances. With the public finances already on an unsustainable path in the longer-term, the temptation to defer necessary decisions even further into the future appears to be proving too difficult to resist.”

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