Brown to explain optimistic forecasts
Chancellor Gordon Brown will appear before an influential Commons committee today to explain what many consider to be overly optimistic economic forecasts set out in the Budget.
Link: MP suspects ‘black holes’ in Budget
He will be grilled by the Labour-dominated Treasury select committee on his forecasts for GDP, (predicted at between 2% and 2.5%) and corporation tax revenues, which Brown has linked to an improvement in the stock market.
The Commons Treasury Committee, chaired by Dumbarton MP John McFall, has called for a review of government economic forecasting claiming that Brown may have over-estimated the future recovery of tax revenues from the recession.
MPs want more warning of the date of future Budgets and also expressed concern about the possibility of future borrowing and tax increases, questioned the chancellor’s growth forecasts, and called for tighter monitoring of the way departments spend increases in their budgets.
The criticism follows demands from the Liberal Democrats for the National Audit Office to review all the chancellor’s Budget assumptions and figures and not just those he asks them to.
The committee also says the Inland Revenue failed to properly predict the demand for telephone helpline advice following the fiasco of the introduction of new tax credits.
Organisations like the Institute for Fiscal Studies believe his predictions for tax revenues are too high, while he will also be challenged on his economic growth forecasts.
Recently Brown has come under attack over the Budget deficit, with PricewaterhouseCoopers claiming a slight miscalculations in economic growth could see the government’s finances sink into the red by as much as £46bn.