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George Magnus

The government’s economic plan has been torpedoed by a productivity shift

9 months ago




Theresa May’s government is creating enough of its own bad news without any help from the Office for Budget Responsibility (OBR), created in 2010 to provide independent and authoritative analysis of the UK’s public finances. Yet in today’s “Forecast Evaluation Report,” the OBR has pretty much holed the Treasury and the government below the water line at a crucial time in the Brexit negotiations, and just weeks before the Budget.

For the last seven years, the OBR has continuously assumed that the UK’s disappointing productivity (output per hour worked) performance would revert to a pre-financial crisis trend of 2 per cent per annum over the medium-term. Ever hopeful, it anticipated that a rise of 1.5 per cent in 2016 heralded just such an outcome, but this proved to be a false dawn, and now the OBR has thrown in the towel. In its report, it says……Read more: