It might seem like smart politics. And it will reassure the markets. The legislation in the King’s Speech today to ensure all Budgets are assessed by the Office for Budget Responsibility (OBR) no doubt seems like a good idea right now. And yet, there is a catch. The incoming Labour government has now completed the job started by Gordon Brown as chancellor back in 1997, and completely outsourced economic policy to ‘independent experts’. At some point, it is going to regret that decision.
It is not hard to understand why the powers of the OBR have been increased in the King’s Speech unveiled today. It will allow Labour to keep reminding everyone that it is determined to avoid the mistakes of the Liz Truss administration, which famously brushed aside the need for an independent forecast before launching its ill-fated mini-Budget. And it will reassure the bond markets that a ‘fiscal lock’ is now in place that will prevent a Labour chancellor from launching any wild spending plans.
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