The Office for Budget Responsibility was created in 2010 to provide independent and authoritative analysis of the UK’s public finances. It is one of a growing number of official independent fiscal watchdogs around the world.
We have five main roles:
1. Economic and fiscal forecasting
We produce detailed five-year forecasts for the economy and public finances twice a year. The forecasts accompany the Budget Statement (usually in late November) and the Spring Statement (usually in March). They incorporate the impact of any tax and spending measures announced in those statements by the Chancellor.
The details of the forecasts are set out in the Economic and fiscal outlook (EFO). Our annual Forecast evaluation report (FER), published each autumn, examines how they compare to subsequent outturns and draws lessons for future forecasts. For a description of the forecasting timeline, read about our forecast process on the forecast methodology page.
2. Evaluating performance against targets
We use our public finance forecasts to judge the Government’s performance against its fiscal targets. In February 2023 the Government set itself a new mandate for fiscal policy: to have public sector net debt (excluding the Bank of England) as a percentage of GDP falling by the fifth year of the rolling forecast period. The fiscal mandate is accompanied by two supplementary targets: for public sector net borrowing to be below 3 per cent of GDP in the fifth year of the rolling forecast period and to ensure that a subset of welfare spending is contained within a predetermined cap and margin set by the Treasury.
In each Economic and fiscal outlook, we assess whether it has a greater than 50 per cent chance of hitting these targets under current policy. Our Welfare trends report (WTR), now published once every two years, examines the drivers of welfare spending, including both those elements inside and outside the cap.
3. Sustainability and balance sheet analysis
We assess the long-term sustainability of the public finances: Our Fiscal risks and sustainability (FRS) – the successor to the Fiscal sustainability report (FSR) – periodically sets out long-term projections, typically following the release of updated population projections from the Office for National Statistics. These long-term projections cover different categories of spending, revenue and financial transactions, and we assess whether they imply a sustainable path for public sector debt.
Both the FRS and the EFO also analyse the public sector’s balance sheet, using both conventional National Accounts measures and the Whole of Government Accounts (WGA) prepared using commercial accounting principles.
4. Evaluation of fiscal risks
Our annual Fiscal risks and sustainability (FRS) – which superseded our Fiscal risks report (FRR) – periodically provides a comprehensive review of risks from the economy and financial system identified in our fiscal risk register, and also includes discussions of specific fiscal risks. In addition to producing central forecasts and projections for the public finances, the EFO and the FRS discuss the risks to those forecasts and projections (both upside and downside). The WGA also provides further information on specific fiscal risks, notably contingent liabilities (such as government guarantees), which we discuss in both the EFO and the FRS.
5. Scrutinising tax and welfare policy costing
We scrutinise the Government’s costing of individual tax and welfare spending measures at each Budget. The Government provides us with draft costings in the run-up to each statement and we subject these to detailed scrutiny and challenge.
We then state in Annex A of each EFO and in the Treasury’s policy costings document whether we endorse the costings that the Government finally publishes as reasonable central estimates and whether we have used them in our forecasts. We also give each costing an uncertainty rating, based on the data underpinning it, the complexity of the modelling involved and the possible behavioural impact of the policy.
These five roles all focus on the public finances at a UK-wide level. But the UK Government also asked us to forecast the receipts from those taxes and spending from social security that it has devolved – or intends to devolve – to the Scottish and Welsh governments.
The Welsh Government also asked us to provide independent scrutiny of the forecasts of it uses in its Budgets.
Our Scottish and Welsh revenue forecasts are published alongside our EFOs and Welsh Government Budgets
In support of these activities, we undertake a variety of research projects through the year. We publish briefing material to inform people about our work, and we provide a same-day briefing on the monthly public finances statistics, to help people interpret the latest data in the light of our most recent forecasts.
BRC members and OBR staff also give talks and presentations at external events. The Chair discussed the role of the OBR, and the difference that it had made after its first three years in existence, in a lecture entitled Britain’s fiscal watchdog: a view from the kennel on 9 May 2013.
We summarise our activities each year in our Annual Reports and accounts.