OBR Publishes Updated Economic Model and Expands Access to Forecasting Tools

The Office for Budget Responsibility has released a detailed article on its updated small macroeconomic model, setting out how the tool works and how it feeds into official UK economic and fiscal forecasts.

The UK’s independent fiscal watchdog has published new documentation on the small macroeconomic model it uses alongside its main forecasting framework, giving researchers, local authorities and businesses a clearer view of how national economic projections are built. The OBR’s March 2026 central forecast, which draws on both models, expects UK real GDP growth to slow from 1.4 per cent in 2025 to 1.1 per cent in 2026, before recovering to an average of 1.6 per cent a year between 2027 and 2030.

The article describes the model’s structure, the methodological changes made to it, and how it sits alongside the OBR’s main forecasting engine as a complementary tool rather than the primary driver of official projections. Real GDP per person is forecast to grow at an average of 1.1 per cent a year between 2026 and 2030 — modest gains in living standards, but positive ones.

The small macroeconomic model is used to test how changes in variables such as GDP, inflation, interest rates and fiscal policy feed through the wider economy in a way that’s internally consistent and open to scrutiny. It also connects to the OBR’s ready reckoner — a spreadsheet tool calibrated to March 2024 forecast assumptions that lets users input alternative economic scenarios and see the indicative effect on tax revenues and spending, with separate tabs for inputs, outputs and calculations.

For Kent, the practical stakes are real. Kent County Council and district councils depend on central government funding settlements shaped by OBR assessments of fiscal space and growth. Funding for transport infrastructure on the M2 and M20, support linked to the Port of Dover and regional development programmes are all indirectly tied to the national fiscal decisions that OBR analysis underpins. The figures show that better-documented models give local economists, University of Kent researchers and council planners a clearer window into the assumptions driving those decisions.

But critics have questioned whether simplified macroeconomic models fully capture regional disparities or the effects of large economic shocks. Some analysts also flag that the size and choice of fiscal multipliers — the factors the OBR applies to link tax and spending changes to demand and output — carry genuine uncertainty, and that over-reliance on point forecasts can be risky when conditions shift sharply.

The OBR was established in 2010 to provide independent forecasts underpinning Budget decisions by HM Treasury, and has faced repeated calls from Parliament and independent reviewers to make its methods more open and replicable. Publishing the updated model and expanding access to the ready reckoner is consistent with that transparency agenda.