OBR: Quis custodiet ipsos custodies?
After Wednesday’s fiasco with the pre Budget post budget forecast release, it is worth looking at how the shadowy OBR is actually constituted. Who are the guardians of the UK’s financial probity? The Office of Budget Responsibility as the UK’s independent fiscal watchdog is supposed to be purer than pure, which is why it was a shock when its forecasts based on Wednesday’s Budget were issued before the Budget. As a non departmental public body, the OBR is independent from government departments and is accountable to Parliament and the UK Chancellor. It is governed by 3 Executive Directors who form the decision-making committee and 2 Non Executive Directors and numbers 52 permanent staff with another 125 external staff drafted in from government departments to produce reports. By the time you read this, the luckless Head may have fallen on his slide-rule but the blame apparently lies with IT. Meanwhile, as a likely kiss of death the Chancellor has expressed full confidence in the Head of the OBR, Richard Hughes.
GBP/USD 1.3226.
EU Borrowing
When POTUS browbeat the EU in the summer to spend more on defence by increasing their individual country defence spends to 5% of GDP by 2035 which marked an immense increase, something was bound to give due to the prescriptive EU rules on borrowing. Budget deficits must be less than 3% of GDP, and public sector debt must be less than 60% of GDP. After the POTUS summer onslaught, the EU agreed to strengthen defence and increase their industrial investment. Now the EU Commission is issuing detention notes to the following: the Netherlands, Croatia, Lithuania, and Finland. Most of the rest of the EU are in danger of joining those countries on the naughty step but in a classic European ploy, Spain, Belgium, and Austria have simply not handed in their homework and not submitted budgets at all.
EUR/USD 1.1583.