There is an increasing sense that the UK's approach towards fiscal policymaking, and in particular the excessive focus on "headroom", isn't delivering good outcomes. Come along on 19 February to hear me make the case for how we could do things differently, and to hear from our terrific panel.

EVENT: Does the UK fiscal framework need a rethink? Thurs 19 Feb | 3pm – 5pm @benzaranko.bsky.social presents a major new report on the UK fiscal framework, with panelists @chrisgiles.ft.com, Victoria Clarke, Rupert Harrison & @helenmiller.bsky.social. 📅 Sign up here ⬇️ ifs.org.uk/events/does-...

Are you an outstanding communicator who knows loads about the UK public finances? Are you attracted by the prospect of a public voice, and the chance to work alongside brilliant economists at the country's finest think tank? We'd like to hear from you: app.beapplied.com/apply/4t6eys...

Fantastic opportunity to work with the very best of fiscal policy analysts.

🚨Rare and exciting opportunity 🚨 We're looking to hire an exceptional economist to work on fiscal policy at the IFS. We don't do this often. It's a chance to shape, carry out and communicate research on some of the highest-profile topics in UK economic policy. [1/4]

This feels like an important finding (albeit from one US study): GLP-1 medications (Ozempic, Mounjaro etc) *do not* pay for themselves by reducing other types of medical spending, at least in the first five years. If anything, GLP-1s increase other forms of medical spending.

A great thread summarising some fascinating work on London's ULEZ. As you might expect, its introduction led more people to switch to electric cars and public transport, but ULEZ also affected house prices and business locations. Low-income drivers were more likely to just pay the charge.

A short seven years (!) after I started writing the code, it’s great to see this paper published. We use high-frequency NHS to data show that short-staffed, less experienced nursing teams deliver worse outcomes – with the largest mortality impacts for patients with sepsis.

An interesting nugget buried in Treasury evidence to the Pay Review Bodies: In recent years, the NHS and other departments have (with HMT permission) raided capital budgets to fund unexpectedly high pay awards. Updated guidance explicitly rules this out.

This is a careful, valuable piece of research demonstrating that cuts to non-disability benefits in the 2010s led to more people claiming disability benefits. Notable, though, that extra spending on disability support only undid a very small % of the original savings.

We're looking for an outstanding economist to lead our health team. This is a rare opportunity, with a great team. If you want to lead economic research with real-world policy impact, there really is nowhere better than the IFS. app.beapplied.com/apply/jfzr0z...

Hospitals currently have a lot more people admitted with flu than at the same time in recent years. It remains to be seen how the peak will compare to previous years. (Half the IFS healthcare team are also currently laid low with it...) www.bbc.co.uk/news/live/c6...

NHS hospitals in England are getting more productive, according to official data. But the waiting list for pre-planned treatment is barely falling. Why? It turns out, the NHS is now doing more stuff to the average patient before they leave the waiting list. See @maxwarner.bsky.social's thread 👇

Would you like to lead our @theifs.bsky.social work on healthcare? We are looking to recruit an outstanding economist to become an Associate Director and lead a programme of economic research on health and/or healthcare. Job advert here: app.beapplied.com/apply/jfzr0z...

At no point in the process did the OBR have the government missing its fiscal rules by a large margin. Leaves me baffled by the months of speculation and briefing. Was the plan to lead everyone to expect a big income tax rise, then surprise them on the day by not doing it..?

Further to this, in a (plausible) scenario presented by the OBR, official plans imply that "unprotected" departments would face cuts of >3% per year, equivalent to more than £20 billion, between 2029 and 2031. That includes police, courts, job centres, colleges, prisons, HMRC, border force... 🤔

Underrated part of yesterday's Budget was what's happening to public service spending in 2028-29. Spending Review settlements reopened just 5 months after the SR to account for loosely-specified 'efficiency savings' of £1.4bn in 28-29 (rising to 4bn in 29-30)

Having now mulled overnight, a few aspects of the Budget where the government deserves some credit: 1) Increasing fiscal headroom 2) A plan for how to tax electric cars, at last (even if imperfect) 3) A plan to gradually undo the "temporary" 5p cut in fuel duty

Some immediate Budget takes from @helenmiller.bsky.social and the IFS hive mind at the link below. What's most striking, to me at least, is the decision to rely so much on tax rises that kick in at the back end of the parliament - just in time for the next election...

“This was a big Budget, but not in the way people were necessarily expecting.” – @helenmiller.bsky.social 📗 Our immediate IFS response to #Budget2025 is out now: ifs.org.uk/articles/aut...

The OBR will now only assess performance against the fiscal rules once per year (in the autumn) but will continue to produce two forecasts each year. Relies on the world understanding that if the OBR forecast a current budget deficit in the spring, it's not technically a breach.

There's an interesting political economy angle to the fact that, with basically every single tax parameter frozen in cash terms (and personal tax thresholds now frozen to 2031), inflation is extremely beneficial for the public finances.

Rachel Reeves can count herself (at least a bit) lucky. OBR productivity downgrade would have knocked £16 billion off tax receipts. But she was saved by £32 billion of *extra* receipts from higher inflation and a shift to more tax-rich growth (lower profits, higher wages).

With apologies to the poor person at the OBR who accidentally hit upload... Key public finance story: smaller OBR downgrade than expected, more borrowing in the short term (extra spending, mostly unanticipated), less borrowing in the medium term (as tax rises kick in).

I've written for this week's @theobserveruk.bsky.social about economic forecasts and how they are (mis)used. observer.co.uk/news/politic...

Amidst ceaseless discussion of possible tax rises, it's worth remembering that spending cuts could be part of any Budget consolidation package. One challenge is that detailed department-level spending plans up to 2028–29 were agreed only in June... We've looked at the options 👇

This is the point. Policy *should not* be adjusted or fine-tuned in response to minor forecasting judgements. Decisions about whether or not to break a prominent manifesto promise *should not* depend on minor forecasting judgements. This stuff matters. We've got to do better than this.

I know it’s always like this. But one striking thing from the budget kite flying and kite pulling back in, is how major policy decisions are constantly being buffeted around by iterative forecast changes. All feels a bit of a silly way to be making major economic policy & political decisions.

The OBR have now confirmed that they've used the 10 working days before 21 October for their debt interest forecast. Here's my precise graphical depiction of what was happening to yields in that period. Suspect this is why the fiscal forecasts are reported to improved.

Your regular reminder that, while it doesn't have every policy option under the sun, @theifs.bsky.social Be the Chancellor tool will tell you how much could be raised from a whole raft of policy changes (e.g. cutting higher-rate threshold by £10k raises ~£17bn). ifs.org.uk/be-chancellor

This is the issue with our current fiscal framework and policymaking equilibrium. It's why, once (if?) the UK gets its house in order (i.e. gets to current/primary surplus), we should consider alternatives to pass-fail rules assessed against the point estimate of an uncertain, moving forecast.

I'm not sure it's an altogether positive development that the bond market now features so heavily in UK political coverage. But we are where we are, and if you'd like to understand it better, this podcast is for you.

Here's an extraordinarily cynical take: did the government talk up the likelihood of a manifesto-breaking income tax rise in the knowledge that it would push down gilt yields in the window the OBR will use for its forecasts? Rowing back now pushes up yields but too late to enter the forecast on 26th

Considerable risks with this approach: 1) revenues more uncertain; 2) greater risk of damaging economic impacts; 3) lots of angry interest groups, makes U-turns more likely; 4) viewed less favourably by bond market investors, many of whom were expecting an income tax rise.

I'm not sure it's an altogether positive development that the bond market now features so heavily in UK political coverage. But we are where we are, and if you'd like to understand it better, this podcast is for you.

Absolutely delighted that our @theifs.bsky.social work evaluating the effects of Sure Start centres won the "Publication of the Year" prize at last night's @smartthinking.bsky.social awards! It's wonderful to be recognised for the quality and impact of our work. ifs.org.uk/publications...

🚨Economics students! People who know or teach economics students!🚨 The IFS offers summer internships each year. Many of our permanent staff started with one of these. On Monday we're holding an online event to provide more info. Please do come/share. ifs.org.uk/events/ifs-r...

Very much one for the fiscal nerds, but important: Bank of England analysis suggests that by pushing down yields, Quantitative Easing (QE) allowed the government to borrow on better terms, on a long term basis, producing fiscal benefits that offset at least some of the headline QE-related losses.

An interesting piece which (rightly in my view) puts policy uncertainty front and centre. But I'm less convinced by the proposed policy prescription: if we kept a 2nd forecast, but don't formally assess rule compliance, what stops everyone else just reading off the OBR spreadsheet?

One reading of this remark is that the fiscal rule requiring debt to be falling as a share of GDP in 2029/30 is now the one that binds (as cuts to capital spending wouldn't help to meet her borrowing rule). That's entirely possible - and was what we predicted in the IFS Green Budget, as it happens.

Great to see @tomcalver.bsky.social using this IFS chart in his (excellent) piece about the UK's economic and fiscal travails. The combination of low growth and high debt interest really does make for some unpleasant fiscal arithmetic. It's a tough time to be Chancellor.

For this week's @theobserveruk.bsky.social I've written about one of my favourite topics: the productivity of the public sector, how it's measured, why it tends to grow less quickly than productivity in the private sector, and what it means for policy. observer.co.uk/news/busines...

Why not ease into the weekend with a 45 minute discussion of the UK's VAT system? VAT is a good tax in principle, but our system is riddled with oddities and inconsistencies which reshape the prices we pay in the shops and the economy we get. We could do better.

The IFS has calculated that the effective carbon price on household use of gas is negative, thanks to its lower VAT rate. ifs.org.uk/articles/tax.... This obviously sets back the carbon transition. Let's hope the Government is looking to make this better!

Lots of hints in Rachel Reeves' speech (e.g. at broad-based tax rises, a chunky OBR productivity downgrade, an increase in headroom) but nothing concrete. It was largely a scene-setting and blame-shifting exercise. Until we see the detail on 26 November, there's not much we can say.

🚨 OUT NOW 🚨 Does the OBR really run Britain? 💼 Former chancellor Jeremy Hunt, Labour MP @jeevunsandher.bsky.social, and the IFS's @benzaranko.bsky.social join @alaintolhurst.bsky.social to discuss whether the Office for Budget Responsibility is too powerful 🎧 Listen now: pod.fo/e/347deb

What's that, you say? You want another long, nerdy podcast about an antiquated part of the UK tax system that desperately needs reform? You're in luck

We're giving the people what they want: more than an hour of content about how we could better tax wealth in the UK. Do listen/watch and let us know what you think.

Rachel Reeves is about to get bitten by the productivity hedgehog. A bigger-than-expected OBR downgrade means a bigger-than-expected consolidation will be needed to meet the fiscal rules. Makes it harder to honour manifesto tax promises, and harder to build in more ‘headroom’.

The Conservatives’ “golden economic rule” requires that for every pound of spending cuts, at least half goes towards reducing borrowing. That’s an overly rigid policy rule. I can also imagine scenarios where it makes tax rises more likely - which presumably wasn't the intention.