Research published by the Progressive Economy Forum has suggested that the fiscal ‘black hole’ in the public finances of between £40 billion and £50 billion is the result of ‘government accountancy rules and uncertain forecasts’ as opposed to tax and spending decisions.
Economists used official forecasts from the Office for Budget Responsibility (OBR) in determining that small changes in forecasts for future growth and rates ‘dramatically alter the size of the hole in the public finances’.
According to the Progressive Economy Forum, these changes to accountancy rules and forecasts ‘produce hugely bigger effects’ than the £50 billion worth of measures the government is rumoured to be considering for the upcoming Autumn Statement on 17 November.
Rob Calvert Jump, an author of the research, commented: ‘There is now a consensus among economists that austerity does significant damage to an economy’s potential, undermining growth, as the experience of the last decade in Britain has shown us.
‘Further austerity will do far more damage than a ‘fiscal hole’ that disappears with tweaks to models or accounting rules.’
The Progressive Economy Forum’s research can be viewed in full here.