Forecasting Independence: Taking the politics out of fiscal projections

This paper argues that the most appropriate reform to the institutions of fiscal policymaking would be the creation of an independent Office for Fiscal Analysis (OFA), separated from fiscal decision-makers in government, that would undertake all official fiscal projections. The OFA’s independence, which would reflect the independence of the UK Statistics Authority, would ensure that it was entirely free from the risk or perception of organisational bias. Its modelling assumptions and inputs would, as far as possible, be open to public scrutiny and its outputs would be freely available to external bodies, in particular, the opposition parties. These reforms would increase the accountability of government both from the perspective of the markets and the electorate, thus lowering the cost of borrowing and ensuring the pursuit of sustainable fiscal policy in the medium-term.