The OBR's Approach to Forecasting the Impact of Exiting the European Union – A Submission to the Treasury Committee of the UK Parliament

Economic forecasts are essentially devices for planning as they provide consistent measure on the current state of the economy and its short term prospects and so allow us to understand the need for and likely impacts of policy actions. A forecast typically results from a set of linked statements, otherwise known as a model or set of models, about the evolution of aggregate variables such as consumption, investment, employment, inflation and interest rate, as well as a number of assumptions about key economic variables that are outside the model e.g. oil prices or equity prices. And our knowledge about the present is less than complete so that any forecast also contains a considerable element of both backcast and nowcast. In this and much more the OBR follows standard practice.