Fiscal Risks and Sustainability Report 2022

Thursday 7th July 2022 Written Statements

[The Chief Secretary to the Treasury (Mr Simon Clarke)]

The Office for Budget Responsibility has published its Fiscal Risks and Sustainability report today. This report fulfils the OBR’s obligation to examine and report on the sustainability of, and the risks to, the public finances, in accordance with the Charter for Budget Responsibility. The UK continues to be a leading example in fiscal transparency and risk management.

The FRS has been laid before Parliament today and copies are available in the Vote Office and Printed Paper Office. The Government will respond formally to the FRS 2022 at a subsequent fiscal event.

The UK has experienced several significant shocks over the last decade, including the challenges posed by the covid-19 pandemic, Russia’s invasion of Ukraine and a spike in global energy prices.

The Government have taken a balanced approach, ensuring that it continues to support people and the economy in the face of global pressures and uncertainty with temporary, timely and targeted support, while reducing debt over the medium term. The Government support for cost of living has now totalled over £37 billion this year, with the OBR noting in today’s report that the Government spent as much

“as it did supporting the economy through the financial crisis”.

The Government are also committed to building a stronger economy for future generations, and the OBR today has revised up long-run productivity growth because of the Government plans to deliver over £600 billion in gross public sector investment over the next 5 years, reaching the highest sustained levels of public sector net investment as a proportion of GDP since the late 1970s.

In the long run, the OBR’s projections show that demographic change, other cost pressures and the transition to net zero will present significant challenges to the public finances. The OBR note the actions the Government have taken to strengthen the public finances and reduce debt levels over the medium term, but significant pressures remain. The report also highlights that the UK still faces threats in the near term. The public finances remain sensitive to inflation and interest rates, with the outlook for energy prices being uncertain and made more pronounced by heightened geopolitical tensions. The Government must therefore continue to bring down the level of debt and rebuild fiscal space, so we can safeguard the economy against future challenges and respond as future risks materialise.

[HCWS191]