UK Budget Watchdog OBR Gains New Powers Amid Debate Over Influence
The Office for Budget Responsibility (OBR) is a UK budget watchdog that publishes independent forecasts and assesses government spending plans, with its chair Richard Hughes at the helm.
There is a live debate over whether the OBR is too powerful and effectively shapes government policy, with critics calling it an unelected body dictating limits and a straitjacket on growth.
In 2024, Labour passed new legislation granting the OBR powers to initiate forecasts without a government request and to question department spending, along with direct access to Treasury data. The Budget Responsibility Committee is appointed by the Chancellor with Treasury consent.
Chancellor Rachel Reeves argues that empowering the OBR improves credibility and that the OBR’s job is to forecast the economy rather than provide running commentary on policy.
The OBR was established in 2010 and given statutory status in 2011. Critics recall past episodes such as the mini-Budget of 2022 and ongoing debates over fiscal independence.
In October, the OBR downgraded productivity by 0.3 percentage points, a change that the Institute for Fiscal Studies (IFS) says increases future borrowing costs and shapes the Budget gap.
From this Budget onwards, the OBR’s 'headroom' will be calculated only once a year to reduce tax-rise speculation; this move is supported by IMF guidance and ties to broader market credibility concerns about fiscal policy.
