LONDON (MNI) – UK Treasury Secretary David Laws said in a BBC radio
interview that the current Treasury growth forecasts may be higher than
would want to come up.
Laws comments suggest growth forecasts could well be cut ahead of
the upcoming June 22 Budget, although this will now be a matter for the
newly created, independent Office for Budget Responsibility.
The Treasury forecasts for this year were not markedly above
independent forecasts, but those for future years have been widely
criticized as over optimistic.
“If we look … at the growth forecasts that were made in the last
Budget … you can see that for the next few years they are very
significantly higher not only from the estimate that we might want to
come up with now, but of those of all of the market forecasters,” Laws
said.
“It is right for the new Chancellor and the new team to ask an
independent body to vet the existing forecasts,” he added.
Chancellor of the Exchequer George Osborne unveiled the OBR today.
It will be headed up by former Bank of England Monetary Policy Committee
member Alan Budd.
The OBR will take responsibility for the forecast underpinning the
Budget arithmetic.
“It is right when you have got a new government that we make sure
that the existing forecasts for public borrowing are right and it is
also the right thing to do to make sure in future that politicians can’t
cheat in the way they put the estimates into the public finances to
create a future profile for borrowing,” Laws said.
Laws also said the public finance “are in a pretty dire state” and
he derided the previous system in which the Chancellor of the Exchequer
could decide on what growth forecast to adopt, and that the Chancellor
could be overruled by the Prime Minister.
–London newsroom: 4420 7862 7491 email: drobinson@marketnews.com
[TOPICS: MABDS$,M$B$$$,MT$$$$]