2. The current fiscal policy process

The UK’s process for setting fiscal policy is relatively unusual among countries with IFIs. The OBR, while an independent body, is heavily embedded in the Budget process while remaining heavily reliant on the government for its modelling capability (Trapp and Nicol, Reference von Trapp and Nicol2017).

This is in many ways a mutualistic relationship. The OBR produces the official forecasts that the Treasury must use in its publications, as prescribed by the Budget Responsibility and National Audit Act 2011—the piece of legislation which governs the OBR’s roles and responsibilities—and therefore the Treasury has a built-in incentive to cooperate with the process. But this set-up makes the OBR one of only three IFIs tasked with producing official forecasts rather than producing alternative scenarios or assessing the reasonableness of the government’s macroeconomic scenarios (OECD, 2020).

To produce its forecasts, the OBR employs a multi-round approach, in which the OBR takes on new outturn data, modelling changes and assumptions in order to converge towards a stable pre-measures base forecast. This has historically been up to four rounds, but in recent years it has stabilised at three (Tetlow and Pope, Reference Tetlow and Pope2024).

Two to three weeks before a fiscal statement to the Commons (and no more than 21 working days other than in exceptional circumstances), the OBR provides the Chancellor with a final pre-measures forecast. This is governed by the OBR’s Memorandum of Understanding (MoU) with government departments.Footnote ² This creates a hard cut-off for substantive changes that are not due to policy. No new outturn data is taken on past this date, be it economic or fiscal, and no further modelling decisions are made.

This is a step that is necessary for operationalising a forecasting process in which Treasury policy has to be incorporated for a final forecast which is published on the same day by both the Treasury and the OBR. While the Treasury provides a ‘scorecard’—a list of policies under consideration—at various points during the pre-measures forecast, these are not binding, but merely illustrative. It is only when the pre-measures base is finalised that the Treasury then provides what is known as the ‘major measures scorecard’—a provisional list of the policies the government intends to take forward, although still subject to change.

There are two ‘major measures’ rounds, the purpose of which is twofold: to allow the Treasury to iterate its decision-making, while also providing the OBR with the opportunity to incorporate any ‘indirect’ effects of policy. An example of this would be a measure which increases inflation, which therefore affects assumptions about interest rates set by the Bank of England, as well as revenues from taxes whose rates are linked to inflation measures.

The OBR has a materiality threshold for these policies—their indirect effects have to be rather large for them to be incorporated in the forecast at that stage. But there can also be a whole package effect: a group of small measures can together clear the threshold of affecting the whole economy. It is also at this stage that the OBR considers the overall change in fiscal stance and applies any fiscal multipliers to account for changes in tax and spending in the round.

The first ‘major measures’ submission is not binding, but the second one is. At that point, all economy-moving measures should be taken into account, and only small movements should happen in the scorecard. The two post-measures rounds were an innovation brought into place for the March 2023 forecast—prior forecasts would have had only one ‘major measures’ round.

After the ‘major measures’ are locked in, the OBR then produces the second post-measures round of economic and fiscal forecasts. Any subsequent tweaks are added to those forecasts to produce what is the final economic and fiscal forecast, usually on the Friday prior to publication. It is on the basis of this final forecast that the OBR and the Treasury then produce their explanatory documents: the EFO in the case of the former, the Budget Report (nicknamed the ‘Red Book’) for the latter—or the Spring Statement, in the case of the year’s second forecast. Both the OBR and the Treasury’s documents are laid before the House of Commons and are made available to Members of Parliament (MPs) in the Vote Office after the Budget Statement (Erskine May, Reference May2019).

Alongside this work, the OBR scrutinises the government’s costings of policy measures to ensure that the methodology used is both reasonable and ‘central’—which in this sense means that there is as much chance of underestimating the cost of measures as there is of overestimating. Centrality is a core remit of the OBR, as stated in the MoU.Footnote ³

On the day of publication, the Chancellor of the Exchequer makes a statement to the House of Commons, usually around lunchtime. The Treasury documents are then made available to the public at the end of the speech, as are the OBR’s publications. The OBR then does a press conference a few hours later, highlighting their main messages from the forecast.

The Autumn 2025 forecast timetable is shown in Table 2, with dates presented as days or weeks until the statement. This was broadly a representative example of the post-2022 forecast process. Note that these are the dates of the fiscal forecast being sent to the Chancellor—the OBR produces its economic assumptions earlier, and disseminates them with the Treasury and government analysts a few days before for modelling purposes. The Treasury has access to a ‘ready reckoner’ model, which allows it to estimate the effects of economic assumption changes on fiscal outcomes with a reasonable degree of accuracy.Footnote ⁴

Table 2.

A list of the steps in a representative forecast timetable, based on recent OBR publications

Table 2. Long description

From the top row downward, the table has two columns. The left column is labeled Time until publication, and the right column is labeled Step. The first row shows 12 weeks and Forecast commission announced. The second row shows 8 weeks and Round 1 forecast. The third row shows 5 weeks and Round 2 forecast. The fourth row shows 4 weeks and Final pre-measures forecast (Round 3). The fifth row shows 2 weeks and Round 4 forecast. The sixth row shows 5 days and Final post-measures forecast. The last row shows Budget day and Budget and forecast published. Each step is aligned with its corresponding time interval, progressing from earliest to latest.

3. Private and asymmetric information in the forecast process

The setup of the forecast process creates significant amounts of private and privileged information. When the OBR produces economic assumptions and fiscal forecasts, it then sends them to government analysts and ministerial leadership at the Treasury. These forecasts can and do change significantly during the three-month process leading up to the Budget, but they provide an initial indication of magnitudes of movement in the public finances.

This private information creates a substantial asymmetry between insiders and outsiders. It also creates incentives to disseminate selective information, and not all actors have the same constraints.

In this scenario, it is useful to consider three main actors with an interest in the evolution of the public finances:

• • The OBR, whose role is to produce economic and fiscal forecasts and publish them to the public just after they are presented to the House of Commons by the Chancellor.

• • HM Treasury (HMT), including both civil servants and political leadership—with the Chancellor of the Exchequer at the helm. The Treasury’s role is to set fiscal policy on the basis of the OBR’s economic and fiscal forecasts, but it is also a political body—and therefore has much more direct interaction with both the public and journalists than the OBR.

• • The public, who represent both taxpayers and beneficiaries of public spending, and on behalf of whom the Treasury sets policy. The public is a very disparate set of actors, including other politicians, informed observers, financial markets, and members of the public. But all of these subgroups interact with fiscal policy both in their day-to-day lives, and through the receipt of communications—both directly (from the Treasury and the OBR) and indirectly (via the media, which reports on the basis of both public and private knowledge).

Table 3 shows the information available to each of these actors at the points in the forecast described in Table 2. Table 3 clearly highlights the asymmetry in information across the universe of actors. The OBR and the Treasury have full information over the process throughout. But in a scenario where the Treasury selectively leaks information during the process—as has happened in recent years—all information making it to the public comes through partial information communicated via media stories writing up leaks.

Table 3.

Information matrix for each of the actors in the forecast (OBR, Treasury and the public)

Table 3. Long description

The table has seven rows and four columns. The first row contains headers: Step, OBR, Treasury, and Public. The subsequent rows detail information access for each actor at each forecast stage. For Round 1, Round 2, Final pre-measures (Round 3), Round 4, and Final post-measures (Round 5), both OBR and Treasury have ‘Full’ information, while Public has ‘Partial (selective Treasury leaks)'. On Publication day, all three actors— OBR, Treasury, and Public—have ‘Full’ information, with Public's access specified as ‘Full (via OBR and Treasury communications and media)'.

The OBR, for their part, have no right of reply. Their only meaningful official communication comes on publication day. It means that by then, the Treasury has had nearly three months of bedding in a narrative that is based on only partial information, and which can be selectively disclosed for political purposes.

The public also end up operating on less information than they would like, and crucially, on information that is based on self-selection by the Treasury. Even when the Treasury communicates directly instead of via the media—for example, the Chancellor’s scene-setting speech on 4 November 2025—the information set being conveyed to the public is still partial and determined by the Treasury. An example would be the setting up of a well-known UK tradition for Chancellors to pull a ‘rabbit from the hat’ on the day of a fiscal statement, often announcing a new policy that is not known about or announcing that some unpleasant policy is no longer needed.Footnote ⁵

This partial and selective information, coming through noisy signals in the media, has real costs in terms of uncertainty. It also almost does not even need saying that it is a dysfunctional way to conduct fiscal policy, leaving weeks of speculation about what the Chancellor might do on the basis of less than a complete picture and incentivising the delaying of consumption and investment decisions.

4. Comparison with approaches in other jurisdictions

While every country’s budget process will have its own unique elements, it is fair to say that the UK’s approach and the role of the OBR are rare among peers. For one, the OBR’s role in providing an official forecast, which the government must use for its tax and spending decisions, is uncommon. According to the OECD (2021), of the OECD’s 35 national IFIs, only two others—Belgium’s Federal Planning Bureau (FPB) and the Netherlands’ Centraal Planbureau (CPB)—produce the official macroeconomic forecast underlying the budget, and the OBR stands alone in producing the official fiscal forecast. A much more common setup is for institutions either to produce alternative macroeconomic (11 out of 35) and/or fiscal forecasts (12 out of 35), or to endorse or assess those forecasts. Of the 35, 29 either endorse or assess the government’s macroeconomic forecasts, while 27 do so for the government’s fiscal forecast.

The most common powers and processes should not however be misunderstood for being the most desirable. The CPB is the world’s oldest IFI, having been established in 1945 and with a total staff of 125, much larger than the average of 34 across the OECD. It has also consistently been ranked as world-leading by OECD and scores in the top four for classifications in all domains considered in the OECD Fiscal Advocacy Index for 2024—independence, analytical focus, communications apparatus and communications impact (OECD, 2025).

The OBR is one of the other three world-leading IFIs in OECD (2025), alongside the United States’ Congressional Budget Office (CBO) and Canada’s Office of the Parliamentary Budget Officer (PBO). These are all institutions that score above 3 out of 4 in the Fiscal Advocacy Index for 2024; no other IFI scores above 2.5. The CBO and the PBO are legislative bodies to serve parliamentarians, and therefore the OBR’s role as an independent agency interacting with the executive is more comparable to the CPB’s.

The OBR is a relatively new body, having only been established in 2010. But despite what is natural criticism, it has established a strong reputation both domestically and internationally, with the most recent external review (van-Geest, Reference van-Geest2025) finding that the OBR had ‘retained its reputation as an organisation committed to the values enshrined in its Charter, working “objectively, transparently and impartially”’.

The 2025 Van Geest Review appraised the obligation of the government to use the OBR’s fiscal projections as standing out internationally and as best practice, but it also recognised that this setup has the effect of putting significant political pressure on the OBR.

This pressure on the OBR crystallised a trade-off for IFIs between relevance in the fiscal policy debate and insulation from outside pressure. The more timely and binding their assessments are in terms of constraining government action, the more in the crossfire they tend to be. From a first principles point of view, this pressure could potentially compromise the OBR’s independence, which is one of the key principles of effective IFIs set out by the OECD (Trapp and Nicol, Reference von Trapp and Nicol2017).

Independence and the perception of independence are of course related to transparency—another of the OECD’s key principles. Greater transparency can have the effect of providing not more information to the public, but also enhancing the independent standing of an IFI by setting out how that independence is delivered in practice. Making more information publicly available in a timely fashion can increase the reputational and electoral costs of imprudent government policy, as set out by Trapp and Nicol (Reference von Trapp and Nicol2017), which reinforces the perception of independence.

In the case of the OBR, publication occurs on Budget Day immediately after the Chancellor of the Exchequer presents their political document to Parliament, with no information disclosed by the OBR in advance. This is only one model; other IFIs tend to publish their assessment days after the Budget, although this difference should be viewed in the context of the embedded nature of the OBR’s role in the forecasting process.

While the OBR only publishes its post-measures forecast, the publication of the standalone pre-measures forecast prior to the Budget is not unprecedented internationally. The CPB publishes a macroeconomic update in the Spring (the Centraal Economisch Plan, or CEP) and a pre-measures draft economic outlook (concept-Macro Economische Verkenning, or concept-MEV, previously known as the koninginne-MEV) in the Summer, before publishing their post-measures forecasts on Budget Day.

5. A proposed reform: decoupling the OBR publication from fiscal statement day

At the moment, official publications come in ‘big bang’ form. On fiscal statement day, both the OBR and the Treasury put out documents and comment to the media on the post-measures forecast, while looking retrospectively at what the government chose to do in response to the pre-measures state of the public finances—which was not known to the public until then.

This essentially conflates two issues:

• • The underlying pre-measures, technical set of changes that the OBR and modellers include in the forecast. This comprises both methodological changes and outturn data, as well as judgements about the outlook for the economy.

• • The policy decisions taken by the government, be they due to measures the government wants to take anyway or in response to the fiscal forecasts.

There is however no reason why these need to come at the same time. In fact, waiting until both are fully accounted for creates the vacuum of information mentioned in Section 3, in which selective briefing of privileged Treasury information to the media can set in train a narrative that is not necessarily the full story.

This article takes inspiration from the process run by the CPB in the Netherlands, in which the pre-measures forecast is published in advance of the Budget decisions. It proposes a narrow but potentially impactful change that would decouple the OBR’s publications from the Treasury’s while minimising changes to the current forecasting process.

In this reformed forecasting process, the OBR would bookend the Treasury’s Budget as follows:

• • The OBR would produce and publish the pre-measures forecast around three weeks before the day of the fiscal statement. This would be essentially the same time at which it already produces the final pre-measures forecast.

• • The government would then have three weeks to decide its measures and to present them to the House of Commons.

• • The OBR would subsequently incorporate the government’s measures, alongside any second-round macroeconomic effects (if any), in its fiscal figures and publish the final fiscal forecast sometime after the Budget—perhaps a few days, or maybe a week or two.

In this proposal, the Treasury would publish the Budget measures themselves. While there are different options as to how involved the OBR could or should be, this article advocates for a scenario in which the OBR does not publish a final, post-measures forecast alongside the Budget, but instead has a buffer of time to incorporate the cost of those measures into its models.

5.1. Strengths of this proposed reform

There are two main advantages of this setup. One is that there would be more transparency regarding the underlying situation of the public finances. Instead of waiting until fiscal statement day to be clear on what the government’s options were, this proposal would mean that the public would be informed in advance.

The government would also have a time-limited window in which to make an argument for what fiscal stance it wanted to take. This could then be scrutinised by informed observers such as think tanks and research institutes, but based on firmer evidence than is the case at present. Opposition politicians would also have time to work out their own response and plan for how to deal with the underlying fiscal situation, instead of having to reply immediately with no preparation time (Table 4).

Table 4.

Information matrix for each of the actors in the forecast (HMT, OBR and the public) under the proposed reform

Table 4. Long description

From top to bottom, the table lists six steps: Round 1, Round 2, Final pre-measures (Round 3), Policymaking phase, Budget Day, and Final OBR publication. For OBR, information is full in all rounds except the policymaking phase, where it is marked N slash A. H M T has full information throughout. The public receives partial information via noisy signals through media in Rounds 1 and 2, full information in Final pre-measures (Round 3) via OBR communications and media, baseline full and policy partial (leaks via media) in the policymaking phase, full information on Budget Day via H M T communications and media, and full information in the Final OBR publication via OBR communications and media. The main differences are in the public’s access during early rounds and the policymaking phase, with OBR excluded from the policymaking phase.

Note: The main differences are in the information sets available to each actor in the final pre-measures round and in the policymaking phase. All actors have full information about the baseline, but the Treasury can still decide to brief during the policymaking phase. The OBR’s information set is presented as ‘N/A’ because it has no formal role in the policymaking phase.

Instead, this proposed reform significantly reduces the scope for the Treasury to influence the narrative. With the OBR publishing the pre-measures forecast three weeks before the fiscal statement day, both the media and the public would have full information about the baseline prior to the start of the formal policymaking phase.

Beyond that point, the OBR would have no formal role until the Budget measures are in the public domain. There might still be scope for Treasury briefings during the policymaking phase, but that would be all about the policy decisions the government is considering rather than the OBR’s view of the economy, which would by then be public knowledge.

The second main advantage of this institutional setup would be to remove the OBR from the firing line in one of the major points of conflict between it and the Treasury around the scoring of fiscal policies—particularly in terms of second-round effects. At the moment, the OBR is put in an impossible situation: it has to adjudicate whether or not policies have a large enough effect to move the economic forecast, but it is often very hard to say anything credibly prior to the policies taking effect. At the same time, the Treasury is often fine-tuning final measures to hit particular targets, which puts pressure on the OBR to incorporate these second-round effects.

But it is a situation in which even the absence of a statement can be interpreted as a statement in and of itself. If the government claims, for example, that a policy will have a large supply-side effect, the OBR can incorporate that effect, but it leaves itself open to accusations of favouritism and risks its credibility if it does not materialise. But if the OBR does not incorporate it, then it is in the firing line for being pessimistic about the government’s policies.

In either case, the OBR cannot really win. It is thrust into a discussion about the effectiveness of government policy, when its original mandate is to provide unbiased forecasts as a basis for the Chancellor to make decisions. This is an uncomfortable position for an independent body to be in.

In this proposed reform, however, there would be a clear separation between the OBR’s forecasting role and the Treasury’s role in policymaking:

• • The OBR stays in its analytical lane prior to the Budget, producing pre-measures forecasts on which the Chancellor can then make decisions;

• • The government is free to make claims about the effectiveness of policy without being able to hide behind the OBR’s assessment;

• • The government still needs to be credible in its claims about the effectiveness of policy in order to maintain market confidence, and so market discipline is maintained;

• • The OBR can then incorporate the policies into the economic and fiscal forecasts when they have already been decided on, therefore breaking the immediate cycle of fine-tuning and reducing pressure on it to accept the government’s view.

This would have the effect of allowing for the possibility of genuine differences of opinion between the Treasury and the OBR without undermining the forecasting process. The government would still be able to pursue the policies it sees fit and which it might genuinely believe to have positive second-round economic effects without having the OBR appraising them before they are even announced. And it would take the OBR away from making judgements on politically contentious areas immediately, preserving the independence of the institution.