Good to see this fabled £40bn figure getting an airing again.
An estimate based on someone drawing a straight line on a graph from 2016, and which ignores any impact from the greatest disruption to hit developed economies since WW2. And indeed the performance of comparable economies within the EU over the past decade.
The unfortunate truth is that meaningful revisions to the OBR’s productivity estimates are nothing new, and the downgrade set to be revealed next month will in fact be small relative to some of those seen in the OBR’s formative years.
This risk of changing potential GDP assumptions, of any actual Brexit drag and the threat of entrenched inflation / higher borrowing costs were all obvious a year ago. Startlingly obvious in fact. And yet Reeves still chose to push borrowing higher by hundreds of billions of pounds, and decided that a margin for error of under £10bn five years’ forward, in a highly uncertain environment, was appropriate.
Her own judgements, and the government’s shambolic attempts to curb the growth of welfare expenditure, are the reasons why Reeves will need to raise taxes again next month. An apparent one-off punishing tax grab last October, not to be repeated in this parliament, and yet here we are again 12 months down the line
It’s rank incompetence and Reeves can’t reasonably blame anyone other than herself for the mess she’s created.
