Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if she will make an assessment of the potential implications for her Department's policies of the New Economics Foundation report entitled Forecasting a better future: the case for a bucket approach to fiscal multipliers and more, published on 31 January 2025.

The independent Office for Budget Responsibility (OBR) is responsible for preparing forecasts for the UK economy. This includes an assessment of the impact of Government policies, where the OBR regularly review and publish papers on their approach.

The Chancellor and OBR Budget Responsibility Committee speak regularly, and there is an ongoing dialogue at official level on a range of issues. This includes the OBR’s approach to preparing forecasts for the UK economy.

The OBR assesses the demand side impacts of policy using multipliers – these estimate the impact on real GDP from government policy. The OBR’s multiplier framework is described in Dynamic scoring of policy measures in OBR forecasts.

The OBR also take account of how specific policies affect the supply side of the economy. This approach is set out in Forecasting potential output - the supply side of the economy.

The OBR have also recently published a new framework for assessing public investment which can be found in the OBR’s Discussion Paper No. 5: Public investment and potential output. This framework was used in the Autumn Budget 2024, where the OBR judged the increase in departmental capital spending to raise potential output by 1.1 percent by 2073-74.

The next OBR forecast will be published on Wednesday 26^th March 2025.