UK minister questions watchdog forecast, in echo of Truss era

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(Bloomberg) – Trade Secretary Kemi Badenoch has questioned the accuracy of economic forecasts produced by the UK’s independent fiscal watchdog, weeks before the government announced a package of tax hikes. taxes and spending cuts designed to reassure markets about the state of the country’s finances. .

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Badenoch, who worked at the Treasury for 18 months until September 2021, told Bloomberg Radio on Tuesday that she disputes the Office for Budget Responsibility’s view that leaving the European Union will hurt British trade at term, adding that she remembers “pretty much all the previous OBR forecasts are never quite accurate.

Although his comments focus on Brexit and trade, they risk reigniting a row that has embroiled the administration of former Prime Minister Liz Truss over its economic policy and the credibility of forecasters. His government announced a massive package of tax cuts with no OBR forecast, rattling financial markets.

As Truss’ government tried to restore calm, then Business Secretary Jacob Rees-Mogg fanned the flames by criticizing the OBR, memorably telling ITV: ‘There are other source of information.”

Badenoch’s intervention also comes at a sensitive time for Prime Minister Rishi Sunak and Chancellor of the Exchequer Jeremy Hunt as they seek to address a £35billion ($40billion) budget shortfall in a November 17 announcement.

Their plan will be released alongside an OBR forecast, with the watchdog’s verdict seen as crucial to avoiding a return from the recent market turmoil.

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Asked about the OBR’s March forecast that UK trade would be 15% lower in the long term due to Brexit, Badenoch said the watchdog had based its figures on previous government policy rather than the how ministers would act in the future: “The OBR has a point of view, we have a different point of view and we will continue to work to find out exactly how to get the best in terms of investing in the UK.

The government will work “in partnership with the OBR to get good forecasts,” Badenoch said, adding that “we respect the institutions and we work well with them.”

–With the help of Alex Wickham.

(Updates with Badenoch time in Treasury in second paragraph, additional comment to penultimate)

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