Evan Davis school’s Laura Trott, Chief Secretary to the Treasury, on basic economics

Does anyone really want this level of ineptitude and incompetence in charge of the economy?

Evan Davis schools the Chief Secretary to the Treasury, Laura Trott, on debt to GDP.

ED: This is really basic… I'm amazed you don't know that debt is rising

LT: I've got different figures#bbcpm pic.twitter.com/ujVfOybVcv

— Haggis_UK 🇬🇧 🇪🇺 (@Haggis_UK) February 8, 2024

How the The Office for Budget Responsibility (OBR) operates

The Office for Budget Responsibility (OBR) is an independent body in the United Kingdom that provides economic and fiscal forecasts. Its primary role is to analyse and evaluate the government’s economic and fiscal policies, as well as to produce forecasts for key economic indicators. The OBR’s forecasts are crucial for understanding the government’s budgetary outlook and informing policy decisions.

The OBR uses a sophisticated and comprehensive modeling approach to generate its economic forecasts.

1. Macroeconomic Variables:
   • The OBR starts by examining various macroeconomic variables such as gross domestic product (GDP), inflation, employment, and interest rates. These variables are fundamental indicators of the overall health of the economy.
2. Global Economic Factors:
   • The OBR takes into account global economic trends and factors that can impact the UK economy. Global factors, such as international trade dynamics, commodity prices, and geopolitical events, can have significant effects on the UK’s economic performance.
3. Government Policies:
   • The OBR considers the impact of current and proposed government policies on the economy. This includes fiscal policies (government spending and taxation) and monetary policies (interest rates and money supply).
4. Assumptions and Scenarios:
   • The OBR makes a series of assumptions about future economic conditions, taking into account different scenarios. These scenarios may include optimistic, pessimistic, and baseline projections to account for uncertainty in the economic environment.
5. Modeling Techniques:
   • The OBR employs economic models to simulate the interactions between various factors. These models can be quite complex and may use techniques such as macroeconomic modeling, econometrics, and other statistical methods to estimate relationships and predict future outcomes.
6. Regular Updates:
   • The OBR regularly updates its forecasts to reflect changes in economic conditions, government policies, and other relevant factors. Economic forecasts are sensitive to dynamic changes, and regular updates ensure that the projections remain relevant and accurate.

It’s important to note that the OBR’s independence is a key feature of its role. It operates independently from the government, and its forecasts aim to provide unbiased and objective assessments of the UK’s economic outlook. The transparency of their methodology and the use of realistic assumptions contribute to the credibility of the OBR’s economic forecasts.

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