Unions demand independent audit of government investment forecasts

Labour unions have formally asked the Chancellor to launch a comprehensive review of the Office for Budget Responsibility (OBR), arguing that the UK’s fiscal watchdog is using assumptions that can weaken the case for public investment.

The request focuses on how the OBR’s forecasting framework treats government capital spending. Critics say the models systematically undervalue public investment by assuming it crowds out private capital, an approach they describe as outdated and a barrier to long-term growth planning.

Unions target OBR assumptions on public investment According to the unions According to the unions, the crowding-out assumption makes major infrastructure and industrial programmes appear less effective in official projections. They argue that this can narrow policy options by discouraging multi-year investment strategies, even when such plans are designed to raise productivity and support sustained growth. The concerns are not limited to technical modelling choices. Opponents of the current methodology say the OBR’s forecasts have an outsized role in shaping the fiscal debate by influencing how governments present budgets and how observers interpret the long-term impact of policy decisions. Leadership change adds urgency to the debate The call for a structural review comes as a new OBR chair takes office. The chair has indicated a cautious view of medium-term GDP growth and interest rates, a stance that has added fuel to arguments over how the institution frames the economic outlook.

This handover has intensified attention on the OBR’s influence over fiscal policy and the way its projections can affect market expectations. With forecasts often used as a reference point across government and financial circles, even small changes in assumptions can carry broader significance.

Wealth Fund mandate and borrowing risk in focus

Alongside demands for changes at the OBR, advocates are pressing for an expanded mandate for the Wealth Fund to support longer-term infrastructure projects. Supporters say a wider remit is needed to back industrial growth more effectively, particularly where project timelines and returns extend beyond typical political cycles.

External analysts, however, have warned that a shift toward higher borrowing could unsettle bond markets. Their concern is that larger or more persistent issuance could create volatility in demand for government debt, especially if investors believe fiscal plans are loosening.

Treasury reiterates priority on fiscal discipline

The Treasury has responded by underscoring that fiscal discipline remains the central objective. Officials have said that any changes to investment policy would need to be weighed against the of reducing national debt.

For now, key uncertainties include whether the Chancellor will agree to the unions’ request for a comprehensive review, how the new OBR chair will approach the contested modelling assumptions, and whether policymakers will pursue changes to the Wealth Fund’s role while managing concerns about the bond market reaction.