The Chancellor of the Exchequer, Rishi Sunak, has commissioned the Office for Budget Responsibility (OBR) to produce an economic and fiscal forecast for
Wednesday 23 March 2022, as per the Charter for Budget Responsibility.
The Budget Responsibility and National Audit Act 2011 states that the OBR must produce a forecast on at least two occasions each financial year.
It is difficult to see how the OBR forecast can be anything but down-beat in light of the present, destabilising world events.
Inflation is increasing and expected to peak at 7% or 8% for most of 2022.
This means that workers who have leverage with their employers, will need a 7 to 8% pay rise to maintain the purchasing power of their disposable income.
In reality, they will need more than the rate of inflation as the combined effects of NIC increases, the price of energy (gas and electric) and oil/petrol continue to rise.
If the Chancellor is committed to reducing government borrowing there are only two ways to achieve this in a budgetary context, increase taxation or reduce government expenditure.
We may all need to drill more holes in our belts in the coming months.