MNI BRIEF: OBR's Miles Open-Minded On UK Productivity Estimate

The Office for Budget Responsibility is "open-minded" on changing its productivity forecast, which has been widely criticized as over-optimistic,  top OBR official David Miles told lawmakers on the Lords Economic Affairs Committee.

The OBR has predicted that productivity growth will rise to around 1.5%, only half its pre-financial crisis level but above recent sub-1% levels. Miles said that the OBR was working on AI and on how productivity has responded in the past after a series of shocks. This work will be done over the summer with the next set of forecasts due out alongside the autumn Budget. 

Miles said the OBR's prediction that debt could rise to around 270% of GDP in the medium-term indicates that "you won't follow that path, because the bond markets will force you off in one way or another ... and there may have to be a .... significant restructuring of the role of the state." (See MNI INTERVIEW:  OBR's Productivity Outlook Realistic - Miles)