UK Office for Budget Responsibility, “we’ve made a huge mistake”…

The latest economic and fiscal outlook from the UK’s Office for Budget Responsibility (OBR) showed that despite an expected loss of momentum in the recovery in 2015, the government is on track to meet their fiscal mandate. Most notable from the report is the lower debt servicing costs assumed, with the OBR reducing the cost of servicing the nation’s debt by £18 billion per year to 2018-19. Cheers to the Bank of England!

£4 billion of this cut in their forecast was down to an “error in our forecast model” which led to their model “over-predicting the stock of debt over time”. The initial reaction on spotting a £4 billion error must have been something like this: I’ve made a huge mistake, but thankfully it will help the government put the budget back in balance by 2018-19. Models are great!