OBR ‘enabled Tory austerity’, economist claims
- The OBR has underestimated the economic benefits of government investment, according to economist Dominic Caddick.
- This misjudgment has incentivized Conservative chancellors to implement austerity measures by cutting spending.
- As a result, the focus on reducing the debt-to-GDP ratio has detrimental long-term impacts on the UK's economic growth.
In the United Kingdom, the Office for Budget Responsibility (OBR) has been criticized for its role in promoting austerity measures over the past decade. Economist Dominic Caddick from the New Economics Foundation argues that the OBR has consistently underestimated the positive impact of government investment on economic growth. Caddick’s research indicates that the OBR's approach has encouraged successive Conservative chancellors to reduce public spending in an effort to decrease the debt-to-GDP ratio. This has led to long-term negative implications for the economy, as the OBR has failed to account for the detrimental effects of cuts to everyday public expenditure. The consequences of this approach are significant, as it has shaped fiscal policy in a way that prioritizes debt reduction over growth-enhancing investments, ultimately stifling the potential for future economic recovery and development.