OBR Updates How It Models Government-Owned Lenders in UK Fiscal Forecasts

The UK’s independent fiscal watchdog has published new analysis explaining how it forecasts public financial institutions — government-owned bodies that provide loans, equity investments and guarantees — and what their activities mean for the public finances. The figures show that incorporating these institutions more fully into the OBR’s November 2025 Economic and Fiscal Outlook reduces both public sector net borrowing (PSNB) and public sector net financial liabilities (PSNFL) over the forecast period, because the financial assets they acquire are counted on the balance sheet. But they tend to push public sector net debt (PSND) higher, since some of those assets are excluded from that narrower measure.

The shift matters because in October 2024 the government changed its primary fiscal target from PSND to the broader PSNFL measure, making the modelling of these institutions more central to whether the UK is judged to be meeting its fiscal rules. Public sector income in 2025-26 looks set to reach around £1,235 billion — about £43,000 per household, or 40.4 per cent of national income — which gives a sense of the scale of the framework within which these institutions operate.

The OBR identifies the valuation of assets held by these institutions as a material source of uncertainty in its forecasts. Updated pension valuations alone are expected to increase PSNB by around £2 billion in the financial year ending March 2020 and reduce PSNFL by around £25 billion, according to the Office for National Statistics — illustrating how balance-sheet adjustments of this kind can move headline figures by billions. Some fiscal analysts have raised concern that complex asset valuations and contingent liabilities, such as guarantees, could obscure underlying risks if assumptions about loan repayments or equity values prove too optimistic.

For Kent households and businesses, the practical exposure is indirect but real. Government-backed lenders of this type can provide finance for local infrastructure, housing development and small business lending — activity that sits on the national balance sheet the OBR models. If the OBR flags heightened risks from these institutions, central government may tighten their mandates or adjust spending plans, which could in turn affect capital funding available to bodies such as Kent County Council, Medway Council or NHS Kent and Medway Integrated Care Board.

The ONS uses OBR forecasts for public sector finance statistics beyond certain historical periods, meaning how the watchdog models these institutions feeds directly into official UK data series. Disaggregated figures for the individual balance sheets of all six institutions — their total loan books, equity holdings and guarantee volumes — are not fully published in the OBR’s summary materials.