 will provide an updated economic forecast that will help inform Mr Hunt's tax and spending measures in the Autumn Statement. The overall forecast is based on a huge amount of information, including predictions for the performance of the housing market – something that has deteriorated since the last set of OBR figures in March. 'May not be pessimistic enough' Julian Jessop, a fellow at the Institute for Economic Affairs, said that the OBR had already been 'quite bearish' on the housing market and house building in the spring, predicting that the 'residential investment' component of GDP would fall by more than 7 per cent this year. However, Mr Jessop said its assumptions 'may not be pessimistic enough'. He pointed out that only 37,750 house builds were started in England in the first quarter of 2023, which was 15 per cent lower than the quarterly average for 2022. While new housing work is only about 2 per cent of total GDP, Mr Jessop said that when predicted growth is 'close to zero, an additional 10 per cent fall in housebuilding, knocking 0.2 per cent off GDP, could make the difference between expansion and recession'. 'And that's without taking account of the knock-on effects on the wider economy, from lower tax revenues to reduced mobility of labour,' he added. 'Fall will have huge impact' The Home Builders Federation, which represents the construction industry, has written to the OBR urging it to consider the risks of falling housing supply in its forecasts. Stewart Baseley, the executive chairman of the HBF, said: 'As we have pointed out){kind=link}
House builders, senior Tory MPs and economists suggest the Government will have even less fiscal headroom to pursue voter-friendly policies
An expected shortfall in the number of houses being built this year could further limit Jeremy Hunt’s room to manoeuvre on tax and spending, the Chancellor has been warned.
House builders, senior Tory MPs and economists have said that the drop risks snuffing out fragile growth, leaving the Government with even less fiscal headroom to pursue voter-friendly policies.
Later this year, the Office for Budget Responsibility (OBR) will provide an updated economic forecast that will help inform Mr Hunt’s tax and spending measures in the Autumn Statement.
The overall forecast is based on a huge amount of information, including predictions for the performance of the housing market – something that has deteriorated since the last set of OBR figures in March.