OBR announcement in King's Speech provides reassurance to markets

Joe Nellis, MHA’s Economic Advisor, comments on the OBR announcement in the King's Speech;

A legal requirement for governments to consult an independent assessment of major fiscal events from the OBR is long overdue, and its implementation matches the new government’s revision of the role of the Treasury in connecting the private and public sectors.

Investment is the engine of growth, and the stability that this initiative creates will produce the confidence in the economy necessary for investment.

As the UK economy makes its slow recovery, significant investment will be necessary from both domestic and international sources.

It is vital that conditions are created to attract and support private sector capital to help create the infrastructure that will be required to support long-term, sustainable growth.

In removing the potentiality of the government using short-term measures for political gain, the financial markets will be reassured that the government can be trusted with the economy.

That a long-term approach to economic recovery will ultimately provide greater political gain makes this an even more beneficial outcome for the government.

The move coincides with the government’s ethos of encouraging a more collaborative relationship between the public and private sectors.

With initiatives such as the National Wealth Fund – a £7.3bn government fund intended to act as a catalyst for a further £20bn of private investment in low-carbon energy – it is crucial that the private sector sees UK infrastructure as a safe and fruitful investment."