IFS/OBR event: Fiscal risks and sustainability

The UK public finances have been buffeted by a rapid succession of nasty shocks. As the Office for Budget Responsibility noted in July 2022, in the aftermath of the pandemic and in the midst of the energy crisis, ‘it is hard to escape the conclusion that the world is becoming a riskier place’. Since then, global interest rates have soared, pushing the UK government’s debt interest bill to its highest level since the 1980s. On top of that, challenges which were once thought of as ‘long-term’ are increasingly posing fiscal risks in the here and now.

This online event, jointly organised by the Office for Budget Responsibility and Institute for Fiscal Studies, focused on two particular fiscal risks facing the UK:

• Following the publication of the latest Fiscal Risks and Sustainability report in July, Richard Hughes of the OBR discussed the vulnerability of the UK government’s debt position and the impact of recent interest rate rises.
• Carl Emmerson presented analysis of policy risks to the public finances, with a particular focus on Chancellors' tendency to respond asymmetrically to 'good' and 'bad' economic news.

Bruna Skarica (Chief UK Economist, Morgan Stanley) then shared her reflections on the findings and joined for a panel discussion and Q&A, chaired by Paul Johnson, Director of the IFS.