Prime Minister Liz Truss and Chancellor Kwasi Kwarteng met the head of Britain’s independent fiscal watchdog, whose analysis they previously spurned, in a bid to reassure markets after chaos triggered by planned tax cuts. The Office of Budget Responsibility (OBR) said it will deliver an “independent” forecast of the Government’s controversial economic plan following the meeting.
The unusual meeting between Liz Truss, Kwasi Kwarteng and the independent spending watchdog, which appeared to last under 50 minutes, came amid market turmoil following last week’s mini-budget.
In a statement published shortly after the meeting, the OBR said it will deliver an initial forecast – which “will, as always, be based on our independent judgment about economic and fiscal prospects and the impact of the Government’s policies” – to the Chancellor on October 7.
It said it will set out the full timetable up to November 23 next week, when the Chancellor is due to reveal his highly-anticipated medium-term fiscal plan.
Treasury and Downing Street sources earlier hit back at suggestions it was an emergency meeting, even as Tory MPs called for the Chancellor’s promised plan to be brought forward to further calm jittery markets.
But as the UK situation worries the markets, analysts are pointing to the EU’s largest economy as their biggest concern.
EuroIntelligence Director Wolfgang Munchau wrote: “The financial crisis is not going to be limited to the UK.
“We argue that the euro area is where the house is most likely to burn.”
Sam Miley, Senior Economist at the Centre for Economics and Business Research said: “Inflation in the Eurozone reached a new record high of 10.0 percent in September. This was once more driven by energy prices, which are set to bring further pressures given the indefinite closure of the Nord Stream 1 pipeline, a major source of gas supply between Russia and the Eurozone.
“The mounting inflationary environment poses a significant risk to Eurozone growth. Indeed, Cebr expects the currency bloc to enter a recession in the latter half of this year. Meanwhile, the lingering effects of demand- and supply-side constraints are set to force a further annual growth slowdown into 2023.”