Paul Johnson

Yesterday’s Budget was more about the OBR’s forecasts than it was the Chancellor’s policy decisions. The forecasts for productivity, earnings and economic growth make pretty grim reading. One should never forget of course that these are just forecasts. But they now suggest that GDP per capita will be 3.5 per cent smaller in 2021 than forecast less than two years ago in March 2016. That’s a loss of £65 billion to the economy. Average earnings look like they will be nearly £1,400 a year lower than forecast back then, still below their 2008 level. We are in danger of losing not just one but getting on for two decades of earnings growth. The knock on effects on forecast borrowing are obvious – it will be pushed up. The Chancellor was spared maximum embarrassment by better than expected borrowing numbers this year and a rather handy £5 billion resulting from a reclassification of Housing Associations and other ONS changes.