Downing Street slaps down Jacob Rees-Mogg over attack on OBR Budget forecasts

Downing Street rebuked Business Secretary Jacob Rees-Mogg today after he criticised the Government’s official economic forecaster and suggested the Chancellor ignore its work. 

The Cabinet Minister lashed out at the Office for Budget Responsibility ahead of Kwasi Kwarteng’s October 31 spending announcement, which will include an analysis of the impact of his plans.

Mr Rees-Mogg told ITV‘s Peston last night that the OBR’s ‘record of forecasting accurately hasn’t been enormously good’.

‘The job of chancellors is to make decisions in the round rather than to assume that there is any individual forecaster who will hit the nail on the head,’ he said. 

‘There are other sources of information. The OBR is not the only organisation that is able to give forecasts.’

But asked about the comments today, Prime minister Liz Truss’s official spokesman told reporters: ‘The OBR is the Government’s official forecaster and the Prime Minister has said on a number of occasions that she values their scrutiny and respects their independence. They are a highly-regarded body worldwide.’

However he also admitted that ministers would look at other opinions of its work, saying: ‘It is true to say that other forecasts are made and it’s important to consider all available evidence and views when making these sorts of important decisions, but the OBR remains the Government’s official forecaster.’

In another outburst he also attacked the International Monetary Fund, which has criticised Liz Truss’s economic plan for unfunded tax cuts paid for by borrowing.

‘The IMF is not holy writ and the IMF likes having a pop at the UK for its own particular reasons,’ Mr Rees-Mogg said.

Ms Truss is battling to survive today as ministers refuse to rule out an humiliating U-turn on tax cuts to appease mutinous Tories.

The PM is desperately seeking solutions after a brutal showdown with her own MPs last night, where she was accused of ‘trashing the last 10 years’ of work.

She is being warned that she must rethink on key measures in Kwasi Kwarteng’s mini-Budget, which helped trigger market chaos that has sent the Pound plummeting and government borrowing costs soaring.

The grim situation the Conservatives face has been underlined by a poll showing Labour leading by 13 points in the so-called ‘Blue Wall’ – suggesting Keir Starmer would seize a swathe of previously safe seats in heartlands.

The panic is so deep that there are claims MPs are even mulling ‘bizarre’ options, such as backing a snap election so that a Labour government has to deal with the worst of the cost of living crisis.

Foreign Secretary James Cleverly toured broadcast studios to try and cool the mood this morning, but fueled more speculation as he stopped short of saying plans to axe a rise in corporation tax will be kept.

Ms Truss had promised to stop the scheduled increase from 19 per cent to 25 per cent in April, which would have raised around £18billion. However, many MPs are now adamant that cannot happen while the government faces imposing an estimated £60billion of spending cuts to balance the books.

Barely a month into the PM’s time in No10, Mr Cleverly was also left begging Tories not to mount a coup.

‘We have got to recognise that we do need to bring certainty to the markets,’ he told Sky News.

‘I think changing the leadership would be a disastrously bad idea politically and also economically. We are absolutely going to stay focused on growing the economy.’

The IMF warned yesterday that the UK economy could sharply reduce in 2023 as consumer suffers from inflation and higher interest rates.

It downgraded its forecast for UK GDP growth next year to just 0.3 per cent in 2023 from 0.5 per cent previously pencilled in.

The Bank of England has already predicted the economy will fall into recession towards the end of this year and has forecast a contraction of 0.1 per cent in the third quarter. 

The UK economy dropped into the red in August as rampant inflation caused havoc – sparking fears a full-blown recession is inevitable.

GDP fell by 0.3 per cent, much worse than the flatlining analysts had expected, with factories and consumer services firms struggling.

Underlining the grim situation the country faces, growth for July was also downgraded from 0.2 per cent to 0.1 per cent.

Labour accused Mr Rees-Mogg of further undermining market confidence with the OBR attack.

The independent body was created by George Osborne and produces a report on the impact of each Budget. Mr Kwarteng branded his financial announcement a fortnight ago a ‘fiscal statement’, meaning the OBR did not have to produce an analysis.

But he has bowed to pressure and his Hallowe’en follow up, in which he will outline spending cuts, will include an OBR publication.

Pat McFadden, the shadow chief secretary to the Treasury, said: ‘Even now, Tory Cabinet Ministers do not appear to have learned lessons since their disastrous mini Budget.

‘The more they publicly trash economic institutions like the OBR, the more they undermine market confidence in their plans and their management of the UK economy.’

The director of the Institute for Fiscal Studies think tank also rejected Mr Rees-Mogg’s suggestion. Paul Johnson told Peston: ‘Of course they matter. It’s really important for, again, credibility which has become so important over the last few weeks, that we have these official forecasts and the Chancellor responds to that by saying: ‘This is how I see my fiscal policy’.’

The economist also pointed out that the OBR forecasts have historically been over-optimistic.

‘I mean, of course, he’s (Mr Rees-Mogg) right, forecasts are always wrong.

‘Actually, the OBR has historically been over-optimistic consistently on the economy. The economy has actually done worse than the OBR has suggested’.