By Peter Hoskin
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Must admit, I love the Office for Budget Responsibility. Not only are they a decent organisation in spirit, designed to suck much of the dastardly politics from the fiscal process. But also, every so often — once a year, in fact — they let their collective hair down and release what they call a ‘Fiscal Sustainability Report’. The first was published last year. The second came out today.
The two reports are very similar to each other — which is to say, they’re both a little bit crazy, in a delightful way. There is a lot of interesting stuff in the latest, such as a chart on page 65 showing the ‘Representative profiles for tax and public services spending’ for people of different ages. But, really, all that’s just preamble for graphs such as this, showing our national debt (the grey line) rising to 89 per cent of GDP in 2061-62:
I mean, 2061?! The forecasts for now from five years ago were inaccurate enough, so just imagine what ones from fifty years ago would have been like. So far as the likely outcome is concerned, today’s OBR figures will probably bear as much comparison to the 2060s as the The Jetsons* will. Not that the OBR fails to acknowledge this. As they put it themselves, ‘It is important to emphasise that — given the huge range of uncertainty around these issues and over these timescales — these should be treated as illustrative broad-brush projections rather than precise forecasts.’
But, despite all that, I do think these OBR reports are important. After years of fiscal incontinence — tied to the idea that spending is a good in itself, even when funded by debt — it’s reassuring to have someone warning about how, if we carry on as we are, and in the face of an ageing population, the situation could turn nasty once again. And, politically speaking, it’s quite helpful for the Conservatives too. Today, the OBR has called for further spending cuts to prevent this dread future. Whether George Osborne delivers them or not, it’s an audit that will sit more happily with him than it does with Ed Balls.
*Set in 2062.