Treasury rejects call for early OBR forecast after meeting to discuss market volatility

Prime Minister Truss met with the OBR today after initially rejecting their offers. Next week, she will meet Tory MPs at the annual conference. Shehab Khan reports the latest.

The prime minister and chancellor have rejected calls for the early publication of the Office for Budget Responsibility's forecast, instead confirming it will be published on November 23 as planned.

Liz Truss and Kwasi Kwarteng met with the OBR on Friday morning to discuss market volatility in the wake of the mini-budget, and was seen as the latest effort on the government's part to reassure the markets.

It came after the revelation that Mr Kwarteng refused the OBR's previous offer of an assessment on the impact of his economic policies, which caused the pound to plummet and forced the Bank of England to intervene and start buying government bonds.

Shortly after the meeting, which appeared to last less than 50 minutes, the OBR said it would deliver an initial forecast of the UK economy to the chancellor on October 7.

“The forecast will, as always, be based on our independent judgment about economic and fiscal prospects, and the impact of the government’s policies," the OBR said in a statement.

However the Treasury rejected the call for an early publication of the budget watchdog's fiscal forecast, and in a statement said an "economic and fiscal forecast" will be published on November 23.

A Treasury readout added: "They agreed, as is usual, to work closely together throughout the forecast process and beyond. The Prime Minister and Chancellor reaffirmed their commitment to the independent OBR and made clear that they value its scrutiny."

The chancellor is now facing calls to bring forward his planned statement setting out how he intends to get the public finances back on track.

Mr Kwarteng said he would deliver his medium-term fiscal plan explaining how he would get debt falling as a percentage of GDP, alongside the updated OBR forecasts, on November 23.

Usually the OBR - created in 2010 to provide independent and authoritative analysis of the UK’s public finances - publishes economic forecasts alongside budgets.

But Mr Kwarteng refused an offer of an assessment on the economic impact of his mini-budget, which including £45 billion in tax cuts funded by a huge increase in borrowing.

What do words like gilt and bond mean?

What is a gilt?

Gilts are essentially loans given to the government, also known as government bonds.

The government sells gilts to raise money for their spending plans. In return, investors who buy these gilts are paid interest each year until it is time for the government to repay investors in full.

For example, if an investor buys a gilt for £100,000 at an agreed rate of interest of, say, 5% over ten years, then the investor will get 5% of £100,000 (which amounts to £5,000) each year (or over another agreed period of time) until it is time for the government to give back £100,000.

The deadline for the government to repay is known as the maturity rate.

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What is a bond? And what is a yield?

The yield of a bond is, simply put, the amount of money an investor receives for buying that bond.

Bonds are loans to the government – also known as gilts, as explained above – and the money the investor makes from the bond depends on the yield.

The yield is essentially the interest paid for the bond.

If an investor loans the government £100,000, this amount will be paid back in full at an agreed date in the future. In the meantime, the investor is paid interest on that loan at an agreed rate.

For example, if the interest is 2% then the investor would be paid £2,000 at the end of each agreed period – which could be a year. This is what the bond yield is.

Higher bond yields may indicate investors are reluctant to buy bonds.

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What is inflation?

Inflation represents the change in price level over a year.

Each month, the Office for National Statistics checks the prices of a range of items in a ‘basket’ of goods and services.

They look at the cost of more than 700 things people regularly buy, including everyday things like a loaf of bread and a bus ticket and larger ones, like a car or holiday.

To calculate the rate of inflation, they compare the cost of the basket with what it was a year ago. The change in the price level over the year is the rate of inflation.

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At the time, a spokesperson for the Treasury said: "Given the exceptional circumstances our country faces, we have moved at immense speed to provide significant energy bill support for households and businesses, and are acting swiftly to set out further plans to kickstart economic growth later this week."

On Friday, Treasury financial secretary Andrew Griffith reiterated this reasoning, adding: "There's always a balance and a tension between having a plan quickly, but also having a plan that wraps in all of the latest available information and then, as a result, endures."

In a letter to the Scottish National Party’s Westminster leader Ian Blackford and the party’s shadow chancellor Alison Thewliss, the chair of the OBR confirmed that the body sent “a draft economic and fiscal forecast to the new chancellor on 6 September, his first day in office”. Richard Hughes wrote: “We offered, at the time, to update that forecast to take account of subsequent data and to reflect the economic and fiscal impact of any policies the government announced in time for it to be published alongside the ‘fiscal event’.” “In the event, we were not commissioned to produce an updated forecast alongside the Chancellor’s Growth Plan on 23 September, although we would have been in a position to do so to a standard that satisfied the legal requirements of the Charter for Budget Responsibility.”

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Mr Blackford called it “utterly damning” that the government failed to commission a forecast from the OBR. He said: “The revelation that the OBR offered to provide a forecast to the chancellor to go alongside his fiscal statement last week, but that it was not commissioned by the Tory government is utterly damning.

“The prime minister and chancellor cannot keep ducking accountability. They must set out why they did not commission economic forecasts from the OBR to accompany their disastrous budget, and they must recall Parliament urgently and reverse their reckless plans.”

Chancellor Kwasi Kwarteng defends his mini-budget as 'absolutely essential' in 're-setting the debate' on economic growth

A Treasury spokesperson told ITV News: “Last week the Chancellor set out the first stage of the government’s Growth Plan, with more supply side reforms to come in the next few weeks - including announcements on changes to the planning system, business regulations, childcare, immigration, agricultural productivity, and digital infrastructure. “And the Chancellor has commissioned the OBR to produce an economic and fiscal forecast which will be published on 23 November.

"He will set out the government’s Medium Term Fiscal Plan alongside this, which will build on the commitment to get debt falling as a share of GDP in the medium term.”

The government is also due to announce whether benefits will be uprated in line with record-breaking levels of inflation.

Treasury financial secretary Andrew Griffith said reports that benefits claimants could receive a real terms pay cut are, at the moment, "speculation".

He refused to clarify the government's plans for benefits, telling ITV News he said could not address each policy in the government's growth plan "line by line".