Tuesday, 6 July 2010

Office for Budget Responsibility loses its head

When New Labour came to power in 1997 they "set the Bank of England" free; ie, created the Monetary Policy Committee so that interest rate decisions would become free of political interference.

When the coalition came to power two months ago today they created the Office for Budget Responsibility in order to take the politics out of economic forecasting.

The MPC is still going strong, but the OBR seems to have hit a pothole in the road. Sir Alan Budd the chairman, himself a former MPC member, has just quit.

Of course he was always intended to be "interim", but he should have lasted a bit longer than two months. It seems he took the whole "independent" thing a little too far and has had a falling out with his political masters.

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