OBR Forecasts

Baroness Wheatcroft Excerpts

Monday 1st December 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to my noble friend for what he said. Obviously, I cannot comment on any specific market movements or lack thereof, but he is absolutely correct that no one at any point was misled. The Chancellor was honest and consistent with the public in everything that she said. My noble friend is absolutely right about the positive market reception to this Budget because we have put fiscal responsibility at the heart of it. We have reduced borrowing every single year of the forecast. We are reducing borrowing further than any other G7 country and net financial liabilities are lower at the end of this forecast period than the beginning. As I said, this is completely consistent with what the Chancellor set out at the start of this process—that she wanted to see debt and borrowing fall as a result of the Budget.

[Baroness Wheatcroft (CB)]

My Lords, would the Minister agree that the real flaw in all this debate is putting such importance on such tiny movements in forecasts? The OBR itself admits that its forecasts tend to overestimate GDP growth and productivity. The reliance on these figures on such short-term movements is utterly crazy when something such as the student loan book stands at nearly £300 billion. Could the Minister tell us what sort of a shortfall he expects to come out of that in the end?

[Lord Livermore (Lab)]

I have some sympathy for the premise behind the noble Baroness’s question. That is why it is important that in this Budget we rebuilt headroom. The Chancellor said at the start of this process, in her speech on 4 November, that she wanted to build greater resilience against global shocks and the kinds of events we are seeing around the world. That is why she built more headroom in the Budget, to £21.7 billion. That provides a greater cushion, for the exact reasons the noble Baroness is saying. The noble Baroness said that the OBR tends to overestimate GDP growth. Obviously, this year it underestimated it, because we beat the forecast for this year. It estimated that growth would be 1% but it turned out to be 1.5%. We were the fastest growing economy in the G7 for the first half of this year and we are on course to be the second fastest for the year as a whole. That is an achievement. She spoke about overestimating productivity, and she is absolutely correct on that. Productivity was downgraded because of the abysmal record of the party opposite over 14 years.