Brexit has triggered ‘explosion’ of investment says Rishi Sunak
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The Chancellor has instructed the UK fiscal watchdog, the Office for Budget Responsibility (OBR), to stop adding updates to its forecast. This decision will mean Mr Sunak can announce a big improvement in the size of the UK economy in the Autumn Budget and spending review, due to be delivered next month.
The move, the Express understands, will help the Chancellor to fight off last-minute public spending bids by government departments.
However, overall, this could also boost Mr Sunak’s chances of having a public finance windfall for tax cuts ahead of the next general election.
The OBR said it had ended updates to its forecast on September 24 making clear it was “earlier than usual in response to a request from the chancellor”.
A Treasury source said the timing of the forecast was an “operational decision which was made in the summer.”
The Autumn Budget will be based on older figures (Image: GETTY)
Rishi Sunak will deliver the Autumn budget and spending review next month (Image: GETTY)
They added: “The forecast timing is intended to allow more time for decisions ahead of a three-year spending review, as was the case in 2015.”
The forecast process was closed off just under three weeks before the Autumn Budget in 2015, compared to five weeks this year.
If the OBR had kept updating the forecast for several more days, it would have improved the outlook of the UK economy during the COVID-19 pandemic due to large revisions in economic data.
The latest ONS data, published this week, revealed Britain’s economy grew in August as the full lifting of coronavirus restrictions boosted events and hospitality.
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The UK economy is returning to pre-COVID levels (Image: GETTY)
The Office for National Statistics (ONS) said gross domestic product (GDP) rose 0.4 percent between July and August in the first full month after all Covid-19 restrictions ended in England on July 19.
Britons rushing out to festivals, theme parks and events helped see the hard-hit arts, entertainment and recreation sector bounce back with growth of 8.5 percent.
The August rise in GDP means the economy is now only 0.8 percent smaller than it was before the pandemic.
But the data showed further signs that the recovery is easing as global supply chain woes take their toll.
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The Bank of England will use the latest data to determine interest rates (Image: PA)
Growth in August was lower than expected, while the ONS also downwardly revised its estimate for July to a contraction of 0.1 percent from the 0.1 percent expansion reported previously.
The economy will also need to soar by 2.1 percent in September to remain on track with the Bank of England’s forecast for overall growth of 2.1 percent in the third quarter.
The revised GDP figure for July was the first contraction since January this year when the winter lockdown weighed on the economy.
Growth rebounded strongly in the second quarter, with GDP rising by 5.5 percent, but the recovery since then has been sluggish, with supply chain problems and the lorry driver crisis holding back the economy.
Meanwhile, the Bank of England said it will use up-to-date economic data in the forecasts used for deciding on interest rates on November 4.