Chapter 1

Embattled Technocratic Economic Governance: The Office for Budget Responsibility from the Crash to COVID

Chapter 1 introduces the book’s focus on the construction of economic reason and the politics of technocratic economic governance. It establishes how seemingly objective economic concepts and methods, used by technocratic governance bodies like the Office for Budget Responsibility to gauge economic growth trajectories and policy effects, are political constructions founded on contestable normative assumptions. It illustrates how studying the OBR provides a window onto the technocratic world of economic expertise and unpacks how the neo-liberal idea of an apolitical fiscal policy process is an illusion. It also argues that the lens of the OBR can be used to explore the broader politics and political economy of Britain’s growth trajectory, and the British model of capitalism, situated within the seismic upheavals of the Global Financial Crisis, Brexit and the Covid-19 pandemic. In doing so, it speaks to broader debates about populism and ‘post-truth’ politics, and assesses the impact of these movements on technocratic economic governance.

Chapter 2 sets out the institutional and ideational context of UK economic governance since the 1990s, analysing the drivers behind the advent of fiscal rules. Designed as a technocratic means of taking politics out of fiscal policy decisions, fiscal rules supposedly reassure electorates and financial markets that the public finances are in safe government hands. Yet as this chapter introduces, there is always a multi-faceted politics of economic policy, even when it is overseen by seemingly objective rules regimes and independent expert bodies. Fiscal rules are not unassailable technical policy constraints but can and do change to accommodate different political-economic ideas and partisan political preferences. Fiscal rules are therefore social constructs, bound up in contested knowledge and narratives of the economy, and subject to manipulation by parties across the political spectrum.

Chapter 2

UK Fiscal Politics and Macroeconomic Policy Rules Since the 1990s

Chapter 3

The British Model of Capitalism and the Politics of Growth

Focusing on Britain, chapter 3 delves into the politics of economic growth – a perennial question of Political Economy that is often discussed in the technocratic governance sphere in dry, technical and depoliticising terms. The chapter demonstrates how different views about the most desirable model of capitalism, including about the preferred mode of state intervention in the economy, underpin economic growth debates and imply their inherently political character. It compares and contrasts four competing theories of economic growth – neo-classical, Schumpeterian, Neo-Keynesian and ‘new’ growth theory approaches – and explores their relationship with stakeholder and shareholder modes of capitalism. Charting the development of a British ‘Anglo-Liberal’ financed-based growth model, it considers how the politics of growth connects with deep-rooted anxieties about Britain’s place in the world. It also explores how dominant understandings of a stable trend growth rate have been challenged in recent years by the Brexit vote, which called for the nostalgic renewal of an economically mighty Global Britain, but led the Office for Budget Responsibility to significantly downgrade the nation’s economic prospects.

Chapter 4 provides an in-depth review of the establishment, operations and role of the Office for Budget Responsibility. Created in 2010 at the beginning of Britain’s Conservative-Liberal Democrat Coalition government, the OBR was designed to oversee UK fiscal governance, including the government’s observance of fiscal rules. While the OBR distances itself from the political fray through the veneer of independent expertise, supported by arcane economic forecasting techniques, the chapter reveals how the organisation is deeply and inevitably political. Judgement, interpretation, discretion, and competing constructions of economic reason are all political ingredients feeding into the OBR’s fiscal evaluation and commentary. They inform how it selects among available economic methods, techniques and assumptions; conducts its forecasts; and develops its narrative of the UK economy. The OBR’s fiscal governance is thus socially constructed and politically contingent, suggesting more broadly that the apolitical goal of technocratic economic governance can never fully be attained.

Chapter 4

The OBR and the Politics of Technocratic Fiscal Governance

Chapter 5

The OBR, Technocratic Economic Governance, and the Politics of Economic Forecasting

Chapter 5 explores how the Office for Budget Responsibility conducts its forecasting work in practice, highlighting the intellectual and methodological choices that go into building a narrative of Britain’s medium-term economic trajectory. While the OBR’s founding legislation forbids it from providing explicit political commentary on the British government’s economic policies, the agency’s mandated tasks of fiscal forecasting and oversight are essentially political. These duties necessarily entail the OBR taking a normative position on the principles of Political Economy and the UK economy. Such normative stances are implied in the particular assumptions, techniques and methods that the OBR employs in its economic forecasting, and in how it chooses to frame its narrative of the economy in light of the limitations of available data. These are all potential sites of contestation in a battle of economic ideas. Focusing on these sites therefore reveals the hidden politics of the technical realms in which economic ideas are implemented.

Chapter 6 explores the difficulties that instability and crisis posed for those forecasting the British economy’s trajectory in the early 21^st Century. It drills down into the Office for Budget Responsibility’s understanding of the UK economy and the drivers shaping its evolution under conditions of pervasive uncertainty, homing in on the OBR’s construction of UK growth assessments. Charting how thinking about growth forecasting has evolved since the Global Financial Crisis, the chapter investigates crisis-defining and crisis legacy defining economic ideas, and explores their impact on how the economy is narrated. It focuses on a series of downgrades that the OBR allotted to Britain’s economic growth from 2010 and considers how the financial crisis caused forecasters to question the dominant assumptions underlying their longstanding economic models. In doing so, the chapter demonstrates the astonishing degree of intuition, judgement and guess-work that informs growth forecasting, and challenges the façade of economic policy as a purely technical undertaking.

Chapter 6

Narrating the Economy: Constructing the Crash and its Legacy

Chapter 7

The OBR and the Politics of Forecasting Brexit Effects

Chapter 7 focuses on the practical and technical difficulties that the Office for Budget Responsibility faced when forecasting the economic effects of Britain’s decision to leave the European Union. The event’s unprecedented nature, coupled with the uncertainty surrounding the Brexit process and the difficulty disaggregating its economic impact from other historical variables all made the OBR’s forecasting work especially challenging. The acrimonious and often fallacious terms of the Brexit debate also posed difficulties for a technocratic economic governance institution seeking support for its economic narrative. Forecasting Brexit effects entailed the OBR taking a normative stance not only on the economic value of Britain’s membership of the Single European Market but also on broader factors including the nature, operation and feasibility of ‘free trade’. Demonstrating how the OBR’s judgements proved particularly contentious for advocates of a post-Brexit Global Britain, the chapter explores how radical uncertainty created the conditions for alternative, specious economic expertise to gain plausibility. It also emphasises the hidden normative foundations on which all economic forecasting is premised, and which always threaten to puncture the OBR’s epistemic authority by illuminating its technical limits.

Chapter 8 explores how the 2020 outbreak of the Covid-19 pandemic radically shifted the parameters of ‘sound’ economic policy. Situating the pandemic within Britain’s broader recent history of intersecting economic shocks – including the Global Financial Crisis (GFC) and Brexit – the chapter uncovers how sustained crisis and uncertainty have caused the Office for Budget Responsibility to significantly rethink how it evaluates, models and forecasts the UK economy. While the GFC raised questions about the potential stabilising role of active fiscal policy, the pandemic consolidated the case in favour of large-scale state intervention, designed to stave off much worse economic outcomes. Amid Covid, the OBR eschewed assumptions of smooth cyclical adjustments in preference of economic models that gave great weight to the damaging consequences of negative spirals and ‘doom loops’, paving the way for an unprecedented government response. Showing how Covid shifted the tectonic plates of fiscal responsibility, the chapter therefore illustrates how economic thinking and forecasting practices are buffeted – and potentially transformed – by historical conjuncture, crisis, and unexpected events.

Chapter 8

COVID Changes Everything – ‘Sound’ Economic Policy and the Historical Contingency of Economic Knowledge

Chapter 9

Conclusion – The OBR and Technocratic Economic Governance in Hard Times

This concluding chapter recaps the book’s core themes, distilling the politics of technocratic economic governance and illuminating the value of a politics of economic method lens for exploring how economic ideas are used in practice by the experts charged with pronouncing on the economy’s health. It then considers how technocratic economic governance and economic forecasting can respond to the additional uncertainties and non-linear dynamics of the major public policy challenge of the 21^st Century – the climate crisis. It also considers future challenges for the Office for Budget Responsibility (OBR), notably Britain’s recent democratic deterioration. With the dawn of ‘post-truth’ politics, the sinews linking the doctrine underpinning economic policy-making to fact, economic reason and logic have become much more elastic. This is a challenging environment for technocratic economic governance institutions to execute their mandates and render government economic policy choices more accountable. The impunity and serial lying encouraged within the British government under Boris Johnson have only made it harder for independent oversight bodies like the OBR to hold government fiscal policy accountable.