The less optimistic OBR projections leave Philip Hammond with less of a buffer as he prepares his November budget RexThe chancellor’s room for manoeuvre in next month’s Budget has been severely crimped after the Office for Budget Responsibility said that an encouraging pick-up in productivity growth last year had proved to be “a false dawn”. In its annual Forecast Evaluation Report, published this morning, the independent forecaster said that it anticipated “significantly reducing” its assumption for potential productivity growth over the coming five years. This is likely to feed through into lower expected output growth and therefore lower tax receipts. The OBR, whose forecasts determine the scope for tax and spending giveaways, said that it had been too optimistic about efficiency gains. In March this year it assumed that trend productivity growth would rise slowly to reach 1.8 per cent by 2021.

Source: The Times October 10, 2017 10:52 UTC