Gareth Lowman

Bigger fall than expected. Consensus was for 3.5%. Core inflation also down below expectations. Door wide open for the @bankofengland to cut rates tomorrow

Interesting. When @RachelReevesMP gave "that" press conference in Downing St earlier this month she put the @OBR_UK and its forecasts front and centre as the explanation for why "difficult decisions" (eg tax rises) were necessary. Yet today we learn, from the chronology sent by the head of the OBR to Meg Hillier of the Treasury Committee, that not only was the OBR forecast NOT going to wipe out her headroom against her fiscal rule, but it had been telling HMT that for weeks. Indeed, by the time she called that press conference the forecast was already nailed down - and the OBR had NOT put the govt in the red vs its fiscal rule. The chronology shows the very first set of OBR forecasts, delivered to HMT in early Oct, did indeed suggest all the Chancellor's headroom against her rules had been wiped out. See the -2.5bn next to "Round 1". But even more striking is what happened next. The forecasts improved. So in every other round the Chancellor would have hit her fiscal rules (had it not been for the govt's own u-turns). By the time of that press conference she still had 4.2bn against her headroom after the OBR forecasts. Yes that's slightly lower than the 9.9bn she had before. But the real thing that pushed her over the edge and meant she needed to raise taxes was a) the previous govt u-turns on welfare etc and b) the abolition of the two child cap. Not the OBR. On the one hand the chronology shows that maybe the decision to hold the Budget so late was a masterstroke since it did indeed provide time for the OBR forecast to improve On the other hand, the tone and content of her press conference seems all the more strange knowing what we know now.

👀 Lower than expected