Treasury pressing OBR over growth plan amid tension over downgrade

Treasury policymakers frustrated by the politically damaging timing of a downgrade to UK productivity forecasts by the Office for Budget Responsibility (OBR) are pressing the watchdog to score the benefits of Labour's pro-growth plans.

- Heather Stewart Economics editor

Rachel Reeves faces the prospect of having to find up to £30bn in tax rises or spending cuts in her budget on 26 November if, as expected, the OBR cuts its forecast for future productivity growth to match the consensus of other experts.

The timing of the OBR's decision to revisit its expectations for future productivity - which will shape the forecasts Reeves must use to set her tax and spending plans - has caused consternation in government. One irked Labour insider pointed out that had the OBR cut its productivity forecast earlier - in 2023, for example - then the former chancellor Jeremy Hunt's pre-election cuts to national insurance contributions (NICs) might have been ruled out as unaffordable. A former senior Labour adviser said: "Rachel has every right to be livid."

For some years, the OBR has been more optimistic about productivity, a key determinant of economic growth, than many other independent forecasters. After a carefully choreographed "summer stock-take" of its forecasting model, it is expected to cut future growth forecasts by up to 0.2% - putting Reeves £20bn off course without any change in policy.