IMF says UK should not scrap twice-yearly economic forecasts

By David Milliken

WASHINGTON (Reuters) -Britain should not reduce the frequency of its twice-yearly economic forecasts, but a related assessment of the government's compliance against budget rules should only take place once a year, the International Monetary Fund said on Wednesday.

The British government's Office for Budget Responsibility currently produces twice-yearly economic and budget forecasts, but there had been some speculation that finance minister Rachel Reeves wanted to reduce them to once a year, to line up with her annual budget.

"The evaluation of compliance with fiscal rules should be annual. ... Forecasting should take place twice a year in accordance with international best practice," IMF fiscal affairs chief Vitor Gaspar said at a press conference.

Reeves has said before that she wants to have just one main budget event a year, but the narrow leeway she left to hit her fiscal goals after her first budget in October 2024 meant she was forced into corrective action in March.

Gaspar's advice follows similar suggestions made by the IMF in a regular report on Britain's economy in May.

Reeves is due to present her next annual budget to parliament on November 29, and earlier on Wednesday she acknowledged that she was looking at tax and spending measures.

Some economists expect her to have to raise taxes or make savings of up to 30 billion pounds ($40.1 billion), or 0.9% of national income, a year after a tax hike of 40 billion pounds - the biggest in more than 30 years - that Reeves hoped would wipe the slate clean.

Britain has the highest cost for new government borrowing among the world's seven largest advanced economies.

Gaspar, who spoke during the IMF and World Bank annual meetings in Washington, said the IMF broadly backed Britain's budget policy.

"Our view is that the plans that have been put forward by the UK Treasury strike a good balance between providing favourable conditions for growth ... and safeguarding fiscal sustainability," he said.

However, another IMF official, Athanasios Vamvakidis, said on Tuesday that UK-specific worries had played a role in pushing up British bond yields more than those of other countries.

"This is driven by a number of factors. Low productivity, sticky inflation. The market is asking for more details on the fiscal plans in the UK, so yields, as a result, are higher in the UK compared to other advanced economies," he said.

($1 = 0.7484 pounds)

(Additional reporting by Elisa Martinuzzi; Editing by Andrea Ricci and Paul Simao)