Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment she has made of the adequacy of the Office for Budget Responsibility's methodology for understanding fiscal multipliers.

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

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 takes 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 would directly raise potential output by 1.1 percent by 2073-74.

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 and public finances.

The OBR committed to reviewing their demand multipliers in their most recent forecast, published on Wednesday 26^th March 2025.