To explore the epistemic politics of how expert economic bodies such as the Office for Budget Responsibility (OBR) play a key role in the making of economic policy, it is important to appreciate the malleability of economic orthodoxy. But, in addition, we should acknowledge the normative underpinnings of fiscal policy ideas, and the agency and intellectual autonomy of technocratic economic institutions. All this, as my book discussed in this symposium (2023a) shows, is crucial for understanding the character and practice, and the politics of technocratic economic governance (see also Clift 2018, 2019, 2020, 2023b).

The OBR plays an important role within the politics of economic policy in two ways. First, in shaping and reshaping understandings of sound economic policy. Second, in altering fiscal policy options through the way they analyse and project the future trajectory of the public finances and the fiscal stance. Both are of first-order political economic significance. The OBR’s narration of British economic crises can open up or close off economic policy options and possible futures. This starkly reveals the power and politics of economic knowledge and expertise.

Studying the OBR is also an entry point for exploring the ‘central paradox at the heart of neo-liberalism’ as described by Gamble. Neo-liberals must use technocratic bodies to sustain a depoliticised, rules-based order, even though they remain suspicious of these bodies as part of the permanent state. This paradox is a source of some of the tensions and contradictions that surround technocratic economic governance. These tensions are especially pronounced amidst Brexit Britain’s increasingly ‘post-truth’, populist and plebiscitary politics, which has diminished UK democracy.

This piece considers these broad questions, and responds to insightful interventions contained in the other symposium contributions. It explores themes of austerity and economic ideas, the politics of economic method and Constructivist political economy, populism and the OBR’s democratic deficit. The discussion goes on to investigate the failings and limitations of technocratic economic governance, and the OBR’s increasingly prominent and potentially consequential interventions on the key policy challenge of our age—the ecological crisis of capitalism.

The OBR, the treasury view and austerity

Technocratic economic governance, Gamble points out, has become embedded in the management of contemporary economies. Yet, as several contributions note, its relation to neo-liberal economic ideas such as austerity remains in question. Both James and O’Donovan reflect on how far the OBR reproduces aspects of Osborne’s austerity agenda, or an updated ‘Treasury view’. The OBR shares some default fiscally conservative traits with Treasury thinking. As a fiscal council, it is also existentially wedded to fiscal prudence and keeping public debt under control. Yet, it is flexible, autonomous and reflexive. It has not been inexorably bound up with a particular form of punitive neo-liberalism of the 2010s. Revealing the contingency of economic orthodoxy, the OBR’s take on COVID response, on economic scarring and on climate crisis (see below) all assume the state has to step in to guide the economy towards a superior equilibrium in ways which contrast with austerian views on public interventionism.

As James and O’Donovan hint, there are grounds to see the OBR’s workings as potentially compatible with many different economic policy projects. The precise nature of UK fiscal rules is a crucial intervening variable. The OBR is mandated to evaluate fiscal policy against those yardsticks, so when governments write targets for short- to medium-term debt or deficit into those rules, these indicators are foregrounded. The OBR thus inevitably shares preoccupations specified (and re-specified) by successive governments in Britain’s fiscal rules. These rules, we have seen, are subject to substantial and frequent change. It would be plausible for them to evolve in ways that admit more progressive policy possibilities, at which point the case for the OBR being a delivery mechanism for a particular form of neo-liberalism would look less assured. Indeed, O’Donovan envisages a possible future OBR technocracy harnessed to different economic policy goals, such as increased public infrastructure investment levels, a muscular green transition, or, indeed, a quasi-developmental state. Were public spending on health and education re-conceptualised as human capital investment, for example, the tectonic plates of British fiscal rectitude and oversight could shift markedly.

The politics of economic method and evolving ideas about fiscal rectitude

Two key themes of the book, each considered in this symposium, are the implications of the changeable and evolving nature of economic orthodoxy, and how much models and methods matter in putting such ideas into practice within economic governance. As Best puts it, ‘the actual bureaucratic techniques and models through which policymakers sought to put economic ideas to work … play an outsized role in shaping the direction of economic policy’. James also underlines this focus on the concrete institutional operationalisation of malleable and historically contingent prevailing economic ideas as one of my book’s key contributions to the study of the politics of economic ideas.

How technocrats make sense of the policy world, shaped by their cognitive filters such as their models, is of fundamental importance. A technical, scientific veneer enshrines the work of the OBR, yet there is a politics of economic method underlying choices of technique and the assumptions made in conducting fiscal evaluation. Such selections—from a range of plausible alternatives—are crucial when technocratic governance institutions gauge economic growth, and in turn the fiscal position. The contingent selection and operationalisation of these methods and techniques is key to the ‘everyday’ or ‘practical life’ of economic ideas as Best has called it (2020). For example, the framework used to make consequential OBR judgements about actual growth’s deviation from growth potential, the so-called ‘output gap’, has evolved to draw on no fewer than 11 different techniques. Economic models and frameworks such as these are vital prisms through which technocrats view and interpret economic policy issues and problems, and they materially shape the conduct of fiscal policy.

The technocratic presumption that experts administer and apply a settled truth in their work is at odds with the reality of a spectrum of different economic ideas, concepts and theories from which they could draw in any given conjuncture. Underpinning these different ideas are a variety of theories about markets and growth, resting on distinct, normatively informed understandings of the economy and policy. These political assumptions undergirding economic policy models deployed by technocrats, Best notes, ‘are almost entirely concealed by their impenetrably technical appearance’. Using the politics of economic method lens (see Clift 2019, 2023a, 2023b), we can explore what is at stake in making technique and assumption choices. It also helps us explore what James calls ‘the epistemological foundations of technocracy’. Recognising the messiness, contingency and complexity of enacting rules-based economic policy cautions us against granting too much epistemic authority to technocracy. We return to the limitations of technocratic economic governance below.

The models and techniques deployed by technocrats draw on state-of-the-art thinking in academic macroeconomics. Yet, there has been significant upheaval in this realm since the global financial crisis (GFC). This was partly because models and theories built on assumptions of a prompt return to equilibrium could make little sense of the Great Recession economic policy conjuncture, or the trajectory of the UK and other economies. There has been fresh thinking on issues such as the role fiscal policy plays in relation to growth (Clift 2018), and increasing reflection on what constitutes appropriate expectations about the medium-term evolution trend of the economy (Clift 2023a). Non-linear dynamics such as the long-term ‘scarring’ of the economy’s productive potential following financial and other crises have become more keenly appreciated.

Each rethink led the OBR to revisit its approaches to forecasting and projections for the public finances. This underlines still further how technocratic economic policy evaluation rests on contingent constructions of economic reason. In each case, the pre-GFC settled wisdom was found wanting as a guide for interpreting UK policy and the economy’s trajectory. Putting technocratic economic governance into practice is guided by the evidence, and the historical record, but also by normative positions on these political and ideological issues that are always in the background of fiscal debate.

This focus on the everyday ‘politics of method’ makes important theoretical contributions to broader constructivist debates regarding ideational continuity and change, and the resilience of paradigms through crises. On the one hand, it alerts us to the possibility of incremental technocratic change ‘below the surface’ of the more reified world of ideological contestation and the battle of paradigmatic economic ideas. For example, as O’Donovan indicates, adjusting evaluation of capital investment and accounting for depreciation could create scope for more expansionary and activist fiscal policy. This has affinities with van’t Klooster’s ideas about ‘technocratic Keynesianism’ in EU governance (2022).

On the other hand, there are grounds to anticipate ideational path dependencies arising from the way economic ideas get sedimented and ‘baked in’ to everyday methods and models (Clift 2024). These will likely constitute impediments to rapid or dramatic ideational change of the kind the paradigm framework anticipates. These are avenues for future ideational scholarship to pursue. Thus the politics of economic method lens and its focus on operationalisation, as delineated in my book, can contribute to deepening our understanding of these perennial questions in Constructivist political economy theorising.Footnote 1

The OBR’s democratic deficit, the populist challenge and trussonomics

The hidden character of this politics of economic ideas is buried in techniques and model assumptions. These remain concealed from public or popular political debate. This raises questions about the balance struck within technocratic economic governance between expert authority and democratic accountability. Although the OBR is committed to transparency, the important political economic assumptions they make are not fully subject to the scrutiny of political debate.

The OBR is not in a straightforward sense a policy-making body, so it is a less egregious case of democratic deficit than, say, central banks. Nevertheless, their work shapes economic policy possibilities (Clift 2023a). The goal of making the political assumptions underpinning technocratic economic models and oversight more democratically accountable is a compelling one. Yet, inevitable knowledge gaps, and the nature of the OBR’s parliamentary accountability, mean the Treasury Select Committee lacks the capacity to kick the tyres of every assumption contained in lengthy OBR reports and analysis.

Such shortcomings in democratic accountability and legitimacy have been exploited by purveyors of the ‘post-truth’ populist discourse which has swept through British politics and the Conservative Party. Conservative politicians have re-politicised the place and role of experts within the economic policy regime, mobilising plebiscitary hostility to ‘elites’ and their ‘establishment’ consensus. Technocratic expertise and its appeal to fact and evidence is in the cross hairs as populist narratives decry an ‘anti-growth coalition’, or a liberal elite sceptical about Brexit, deeming them offensive to the ‘will of the people’.

The OBR’s evidence-based approach, situated within bodies of expert knowledge, is anathema to this mode of politics. Truss et al. considered that corpus of existing knowledge to be the problem—a pessimistic groupthink that underestimated the UK economy’s potential for dynamism given radical economic policy change. Trussonomics dismissed the constraints of established ways of thinking about economic policy and the economy. It envisaged a new form of ultra-deregulated low-tax neo-liberalism to sweep away a ‘failed consensus’ which characterised the established institutions of economic governance. Rejecting ‘Treasury orthodoxy’, Truss and Kwarteng ousted the Permanent Secretary to the Treasury, Tom Scholar, to demonstrate their distinctive approach. This re-politicisation of economic expertise also took the form of rejecting offers of independent OBR evaluation, with Cabinet Ministers issuing veiled threats about the watchdog’s future.

This rejection of independent fiscal oversight added to a sense of doing economic policy differently. It also suggested a desire to shield Truss’s economic plans from scrutiny. The tension between technocracy and post-truth populism reached its zenith in the market turmoil associated with Truss’s disastrous ‘mini-budget’. Having evaded technocratic oversight, and taken against ‘Treasury orthodoxy’, the Truss government struggled to find alternative means to assuage financial markets or generate economic credibility.

The key division was that Truss and Kwarteng embraced a market fundamentalist, libertarian vision of British growth and its drivers. They envisaged sunlit uplands of a dynamically growing British economy released from interventionist shackles. The OBR, meanwhile, guided by their experience of economic policy’s limited effects on underlying growth was unconvinced by confident assertions of a ‘Singapore-on-Thames’-fuelled dramatic growth boost. The OBR quietly questioned the plausibility of growth claims attached to the novel economic strategy of enormous unfunded tax cuts in a high inflation, high interest rate environment.

A particular style of economic policy advocacy, with a more tenuous link between economic policy argumentation and facts and evidence, informed Truss’s statecraft. Drawing on Tufton Street think tanks, this more ideologically driven policy advocacy was less rooted in appreciation of the practical limitations facing radical economic policy changes. It contrasted with the pragmatic operationalisation considerations central to the Treasury, OBR, the Bank of England and other establishment voices which Truss differentiated herself from.

The likes of Jacob Rees Mogg were quick to challenge the epistemological foundations of technocracy, decrying ‘wrong’ or inaccurate forecasting, and denigrating the wider knowledge production and authority of bodies like the OBR. The point about OBR evaluation in relation economic credibility is not that the OBR assessments will be wholly accurate. Rather, they lay out and justify reasoned, evidence-based judgements, attaching significant caveats and ‘health warnings’ to their forecasts. The Truss mini-budget could not be said to possess any of these characteristics. The economic crisis which this cavalier economic policy approach catalysed saw a collapse in sterling and financial market confidence, as well as sharply rising UK government borrowing costs.

The expert input into and oversight of economic policy-making the OBR provides do, it seems, deliver some credibility ballast which can steady the fiscal ship. Truss’ reckless adventurism did much to underline the merits of such ballast. The outcome of this tussle between OBR technocracy and economic populism in Autumn 2022 served to reinforce the case for independent policy oversight. The OBR’s work to sustain and strengthen links between policy-making and facts and evidence demonstrated its merit amidst an increasingly populist, post-truth political context.

Holding economic policymakers to account becomes more important in an era where oversight and scrutiny have been placed on the back foot by the Johnson government at its successors mobilising plebiscitary ‘will of the people’ tropes to evade and ignore democratic accountability. Relying on an institution with its own significant democratic deficit to bolster accountability is a dark irony which illustrates the democratic deterioration of Brexit Britain. Best, Gamble and James all pose highly salient questions about the relationship between technocracy and democratic accountability, finding some fault with the current configuration. Best notes how economic expertise needs to be subject to the political debate (McNamara 2002), and calls for more robust democratic processes of engagement and deliberation. One question for future research is whether insights from democratic design theorising (Saward 2021), or deliberative democracy (Bachtiger et al. 2018), can be mobilised to make the political assumptions underpinning technocratic economic models more democratically accountable. Yet, as James asks, what ‘would a democratic and deliberative form of economic governance look like?’ How might it strike a better balance between technocracy and democratic oversight and accountability?

Failure, ignorance and the limits of technocratic economic governance

Truss’s mini-budget debacle thus helped reinforce the OBR’s reputation as an institutional source of credit-worthiness. Yet, as my book and several of contributions to this symposium have underlined, there are significant limitations to and shortcomings with technocratic economic governance. The evolutions of fiscal thinking noted above, and the multiplicity of fiscal ideas creates scope for tensions, perhaps even contradictions within the contested, contingent sets of practices that the OBR enacts in its economic forecasting. These forecasting practices are revised and renegotiated against a backdrop of evolving fiscal policy orthodoxy, and this is where the politics of economic method plays out.

When the real path of the economy diverges from expectations arising from models, as occurred following the GFC, forecasters have cause to rethink their methods.  Long after the GFC, beset by Britian’s successive overlapping economic crises, OBR forecasters still struggle to make sense of the economy’s medium-term trend (Clift and McDaniel 2022). In the background, there remains some anticipation of a return to a (revised and downgraded) ‘normal’ trend. Yet, as OBR Director Richard Hughes puts it, ‘normal times have been hard to come by’ for the British economy in the last decade and a half.

Best, James and O’Donovan all underline in interesting ways the limits of learning with technocratic economic governance—and draw out some of the implications. Best detects, by implication, a ‘social learning’ story underpinning my account of how the OBR evolves and adapts its economic evaluation. This perhaps anticipates an ability to resolve the difficulties and overcome the limitations of economic forecasting. However, the epistemic foundations of economic forecasting mean that resolution of all these dilemmas remains always ultimately unattainable.

Default expectations of Bayesian updating or a ‘scientific logic of learning’ presumes too clean and straightforward a process. Tacit knowledge, rules of thumb, gut feeling and intuitions informed by long experience are all part of the deliberative process through which OBR methods and techniques evolve in practice (Clift 2023a, pp. 94–99, 104–105, 111–112). This is inevitable given the pervasive uncertainty, combined with the limits of the possible inherent in economic forecasting. The OBR’s work requires it to judge tricky and elusive concepts—such as the potential growth rate, or the output gap. These are non-observable economic categories, which are nevertheless very consequential for their assessment of the economy and the public finances. The epistemic status of OBR claim-making needs to be viewed in this light. The reflexivity, transparency and awareness of the limitations of economic forecasting demonstrated by OBR economists cannot ultimately overcome these shortcomings—it can only recognise them.

Coping with radical uncertainty, and the inherent imperfections of the economic forecasting exercise, and indeed accepting the failings of their models and techniques are part of these practitioners’ day-to-day reality. The OBR press on in pursuit of their mandate, mindful of the limitations and inevitable inaccuracies. Their commitment to transparency reveals the deep-seated unknowability about the economy, and the economy’s illegibility. That economy is also buffeted by successive grave crises. This means that technocratic economic governance will always involve some ‘contingent learning’ and many discretionary judgements.

Best is right to underline the endogenous roots of the failings of the economic forecasting exercise. Heroic assumptions which necessarily underpin economic forecasts (such as anticipations of a post-GFC ‘bounce back’) are themselves a potential source of fragility—especially through deeply unstable and uncertain economic times. Examining the workings of the OBR at close quarters indicates that staff do their best to let what James calls ‘careful scientific reflexivity’ reign, guided by their commitment to tell the most accurate story possible. Yet, coming back to the limits of democratic accountability—how secure is that approach in the face of ministerial pressure, or the demands of bureaucratic reputation, and how far can being answerable to the Treasury Select Committee safeguard it?

Climate change, ecological non-linearities and evolving economic rectitude

Despite limits in terms of technical capacity and democratic legitimacy surrounding it’s oversight work, the OBR nevertheless plays a key role in shaping the future path of economic policy. This is true in relation to one of the key policy challenges of our time—tackling climate change. Here too, economic ideas are changing, with important consequences for fiscal policy and its oversight. The OBR is alive to the climate crisis, yet its mitigation presents new challenges to expert fiscal evaluation. Gauging the future fiscal costs of climate change and its mitigation is forbiddingly difficult to do with anything approaching precision (OBR 2021, 2023a, 2023b). Nevertheless, coming to a view of what the costs of unmitigated climate change might look like, not only in the near future, but in decades to come, is an important and necessary step. This evaluation, after all, needs to guide climate change mitigation (CCM) and adaptation infrastructure investment and climate policy decisions in the present.

The OBR’s 2021Fiscal Risks Report (OBR 2021), drawing on Climate Change Committee (CCC) scenarios and decarbonisation projections (CCC 2021), assessed in broad-brush terms the long-term UK fiscal risks associated with climate change, gauging the public debt implications of both prompt CCM action and no mitigation across the twenty-first century. Prompt and decisive CCM action adds 21% of GDP to UK public debt in the coming years, whereas no mitigation adds 289% - and leaves the environmental crisis unresolved. The idea that the government cannot afford not to invest heavily in CCM and green transition activities and infrastructure is key to the OBR’s assessment of the economic costs of climate change (see also OBR 2023a).

How expert bodies like the OBR deploy insights into ecological non-linearities, and environmental tipping points, and use them to change their economic and fiscal evaluation will be crucial for the politics of tackling climate change. Yet, these are difficult insights to operationalise for a fiscal council with a built-in attachment to fiscal discipline and a traditional conception of fiscal sustainability. The ‘least cost’ paradigm of standard cost/benefit analysis, following current price signals, is not readily reconcilable to taking this long-term, non-linear ecological view.

This is another area, like the ability to understand the economy’s medium-term trajectory, where the OBR recognises that the forecasting world needs to develop its skill set and its array of techniques further (see OBR 2023b). The OBR’s 2023 Fiscal Risks and Sustainability Report focuses on the fiscal costs of transition to net zero (2023a, pp. 87–98). It makes the crucial point that ‘Although completing the energy transition to net zero is likely to generate some significant fiscal costs, maintaining the UK economy’s current reliance on natural gas would not be costless either’ (2023a, p. 93).

The OBR finds ways, leveraging instability and uncertainty around future fossil fuel energy prices, to make the fiscal case for prompt CCM action. They project forward future gas price spikes, similar to those following the Russia/Ukraine war’s outbreak, and the knock-on fiscal costs. Decarbonisation to wean the UK economy off fossil fuels in the coming decades in this light proves cost-effective. In one OBR scenario, continuing gas dependence combined with a fiscal policy responsive to price hikes could add 13% of GDP to debt by 2050. Compared to this, the total public investment cost of completing the transition to net zero, which would eliminate those costs of gas dependence, look much more reasonable. Indeed, ‘the most gas-related component of that [net zero] investment cost’ is 6% of GDP, half the cost of gas dependency (2023a, pp. 93, 97–98). Thus, ‘continuing our dependence on gas at the current level could, in an adverse scenario, be as expensive fiscally as completing the transition to net zero’ (OBR 2023a, p. 11).

A key question is how the OBR moves from broad-brush assessments to more fine-grained fiscal evaluation of climate change and its economic costs. In relation to climate change, and the fundamental uncertainties and non-linearities associated with its long-term economic and fiscal impact, the OBR are keen to draw on cognate expertise (OBR 2023b). Recognition of limited OBR knowledge leads them to invite input from other climate change modellers, forecasters, scenario builders and risk analysts, including the CCC, IPCC, IMF or the Bank of England. Addressing not only mitigation, but also adaptation and damage, OBR hopes in the future to ‘integrate [climate change’s economic and fiscal costs] more systematically into the models we use to make medium-term and long-run economic and fiscal projections’ (OBR 2023b, p. 12).

Mindful of their epistemic limitations, the OBR notes, ‘we are not ourselves experts in climate science’. Nevertheless, they ‘seek to apply economic and fiscal analysis to the evolving work of experts in the climate field in order to fulfil our core mandate’ (OBR 2023b, p. 1). Thus, the OBR looks to draw on in-depth, sophisticated climate scenario modelling and risk analysis conducted by the CCC, IPCC, Bank of England and others. Yet many of the economic assumptions underpinning some of the IPCC's climate scenarios, for example, are dubious and highly problematic (Clift & Kuzemko 2024). The quest for more refined assumptions related to climate change and its fiscal implications may prove to be a long and arduous one. Gauging climate change's economic costs remains a huge challenge facing OBR fiscal forecasting.

As global temperature targets, or emissions reductions targets continue to be missed by worryingly wide margins (IPCC 2022, 2023), the threats of snowball affects, accelerating adverse feedback, tipping points and other extremely costly ecological non-linearities increase. The fiscal sustainability case for more CCM public spending and policy change gets stronger. As the IMF, IPCC and others have pointed out, the upshot of no mitigation will be very high levels of economic cost. Fiscal councils such as the OBR can play a crucial role in the politics of tackling climate change, opening up policy possibilities for more CCM action. Technocratic fiscal evaluation can move away from ‘least cost’ assumptions, and adopt more fine-grained and realistic appreciation of costly ‘business-as-usual’ non-mitigation as the benchmark against which CCM expenditure is gauged. These are further examples of how the subterranean methodological techniques used by technocratic bodies in putting their economic ideas into practice can be of first-order political significance.

Conclusion

The populist, plebiscitary drift in UK politics, which became especially pronounced in the context of Brexit, escalated tensions between expert institutions of the ‘permanent state’ and elected politicians. This speaks to the paradox of neo-liberalism delineated by Gamble, which reached new heights under the Truss government. The demonstration effect of Liz Truss seems to be that the OBR is a useful credibility-bolstering bulwark. Their fiscal oversight can help secure economic confidence amongst market participants, and stave off bond market turmoil. Successive Labour front benches have affirmed staunch commitment to the institution.

Yet, its weaknesses in terms of democratic accountability mean its long-term future at the heart of UK’s economic policy regime may not be assured. The OBR’s fragility is deepened by its vulnerable constitutional status. Any government has the power to abolish it. The challenge to its epistemic authority posed by deeply uncertain and unstable economic times exacerbates these fragilities. Successive crises threaten to highlight the precarious epistemic foundations of economic technocracy, laying bare how technocrats are prone to fail, grappling with contested and contingent historically specific constructions of fiscal rectitude.

My book raised the question about how durable the conditions of possibility are for technocratic economic governance. This is due in part to successive crises and upheavals impairing the legibility and knowability of the economy, and also to rising populist politics. James pushes this further, seeing the OBR as a fleeting institution, perhaps associated with an outmoded variant of neo-liberal statecraft, and asks whether this populist upsurge represents an existential threat to technocratic economic governance’s viability. Problematically, if expert bodies like the OBR stand as one bulwark against ‘post-truth’ plebiscitary political discourse, these are bulwarks built on flimsy democratic credentials.