The OBR vs reality

February 27, 2013 10:46 am

The Office for Budget Responsibility (OBR) was set up by George Osborne to provide estimates of economic performance without the interference of the Treasury. Today as the final figures for 2012 are released by the Office for National Statistics, we can compare how the OBR estimates compare with what Osborne has delivered in reality.

Lets take growth in 2012 for example. Growth is estimated to have been 0.3% across 2012 – yet in 2010 the OBR predicted a whopping 2.8% growth:

obrvsreality1

And how about business investment in 2012? The OBR originally estimated that would be 10% – yet it’s actually just 0.4%:

obrvsreality2

Of course circumstances change and economic forecasts are often wrong – but the problem is that these forecasts are what the government’s entire economic strategy was based on. And when it proved to be wrong – Osborne carried on with Plan A anyway…

(h/t: Duncan Weldon for the stats)

  • postageincluded

    What’s more, the errors that the OBR makes seem always to be errors that flatter the government.

    Chote came to the OBR from the Institute for Fiscal Studies, which despite its claims to independence, consistently recommends tax changes that benefit the rich at the expense of the poor. Its pretty clear that his economic theory is one designed to promote Tory policy rather than provide independent advice. As always the Tories have surrounded themselves with yes-men who will tell them what they want to hear. The only surprise is how quickly they did it.

  • Monkey_Bach

    Never in the field of economic forecasting has so much been miscalculated about so many things by so few…

  • BenM_Kent

    “And when it proved to be wrong – Osborne carried on with Plan A anyway…”

    You didn’t think Osborne’s strategy had anything to do with reducing the deficit did you? Naive!

    Even today Tories around the web are belching out their small state mantras as if the disasters in the past 6 years brought on by their economics hadn’t happened.

    It’s the ideology, stupid.

  • Dave Postles

    Irresponsible budgies, the lot of them. The canaries in the Treasury provide the data and the budgies just accept the data.

  • TomFairfax

    Don’t forget the first head of the ‘independent’ OBR left after they issued forecasts that didn’t aid the government’s case, but were a damn site closer to reality. Hardly surprising that ever since the OBR is nothing more than the propaganda wing of the Treasury. For instance scorn was poured on the OBR predictions for the 4G auction when they made them last year by industry watchers, but somehow the government chose the OBR figures rather than the accurate figures being discussed by those who knew the telecoms industry. Labour should propose to scrap the OBR unless they stop the charade and actually start publishing information that isn’t disproved almost immediately, and actually warrants the cost of the organisation. I’m sure I and most LL commentators could forecast to the same level of inaccuracy at a fraction of the cost, even though it’s a challenge to be that wrong so consistently.

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