Union calls for robust review of OBR over fears it holds back economic growth
The TUC is calling on Chancellor John Healey to order a comprehensive review of the Office for Budget Responsibility, arguing that its economic modelling discourages investment and weakens growth. The union says the OBR assumes public investment displaces private capital, rather than attracting it, and claims this reflects outdated austerity-era thinking.
The TUC wants the review considered ahead of Healey’s first budget on 28 October and is also urging greater use of government-backed investment bodies. It says the National Wealth Fund and National Housing Bank could invest more under existing fiscal rules, including in projects taking up to 15 years to generate returns. Jonathan Haskel, the incoming OBR chair, has warned of higher interest rates, weaker GDP growth and a difficult fiscal position.
- TUC wants a full review of the OBR’s investment assumptions.
- Union says OBR modelling may deter public investment.
- It also seeks expanded long-term state-backed investment.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
The TUC argues that the OBR's assumptions are based on outdated economic models that assume public investment crowds out private investment—a theory that modern economics and real-world evidence suggest is often incorrect. By treating public and private investment as necessarily competing, the OBR discourages productive public spending on infrastructure, research, and skills that would actually attract and complement private investment. The review would allow the OBR to update its models to reflect contemporary economic understanding, enabling better-targeted public investment that boosts both growth and productive capacity.
The case against
The OBR exists precisely to provide independent economic analysis free from political pressure and short-term incentives to overestimate growth prospects. Crowding out remains a legitimate economic concern—not all public projects generate genuine returns, and fiscal constraints exist to ensure long-term stability and maintain market confidence in government finances. Loosening assumptions or redefining fiscal rules through backdoor channels, as the TUC proposes, risks undermining the OBR's credibility and independence. Given genuine economic headwinds including interest rate pressures and fiscal challenges, maintaining rigorous, sceptical analysis is more important than ever.