João Sousa
@joaosousa.bsky.social
Senior Research Economist at @TheIFS.bsky.social, formerly at the Fraser of Allander Institute and the OBR. Mostly economic and fiscal policy, plus the odd rugby and football post. Views are my own, shares are not endorsements. He/him
Main takeaways from our @theifs.bsky.social response to GERS Little change since last year: notional deficit down slightly to 10.9% of GDP, but still substantially higher than the 4.2% registered at UK level. Driven by higher public spending, a continuing pattern; revenues pretty much at the UK avg
Some personal news: today is my last day at @fraserofallander.org. I've learned so much over the past three years, and I can't thank my colleagues enough - the FAI is in my view a brilliant institution, full of talented people and playing a pivotal role in scrutiny of public policy.
Amazing stuff - and also further evidence of just how bonkers our VAT system is. All of this is deadweight and welfare-reducing in the aggregate - including this fabulously amusing article
FT Alphaville@alphaville.ft.com · 3mo agoIn this world nothing can be said to be certain, including ketchup taxes. as.ft.com/r/bb58a16c-b...
This seems like a bad idea, just like we said about the Scottish proposal. Will likely solve nothing, cause shortages if cap very low or lead to artificially supplied (and wasteful) low quality products no one wants. National loaf anyone?
David Higham@oldtrotter.bsky.social · 3mo agowww.ft.com/content/8573... UK Treasury pushes supermarkets to cap food prices
Britain, 2335: The budget ceremony begins with the traditional Announcement of the Fuel Duty Rise. Two months later, there will be the traditional Postponement of the Fuel Duty Rise, continuing a ritual begun centuries earlier by Chancellors in the Fossil Fuel era
Peter Stefanovic@peterstefanovic.bsky.social · 3mo agoRachel Reeves will scrap plans this week to increase fuel duty by 5p a litre from September amid mounting concerns about the impact of the Iran war on the cost of living www.thetimes.com/uk/politics/...
Look at the charts and tell me there's a lot of room for manoeuvre in the public finances. Even with optimistic spending totals and a strong primary surplus, debt will still be higher than today and barely falling. And that presumes we'll *finally* start to tighten fiscal policy
My latest @heraldscotland.bsky.social article: why the BoE decided to wait, and why the UK Govt ought to be exploring how to design a targeted scheme rather than a repeat of 2022's blank-cheque approach www.heraldscotland.com/news/2599742...
No smoke without ire if energy targets fail
With war breaking out in Iran and the broader Middle East in the past month, market uncertainty has ratcheted up again. One thing is clear, however:…
heraldscotland.com
How is the Iran War affecting inflation expectations and the public finances? And what do the increases in gilt yields affect the context of any UK Government response? Read our analysis below: fraserofallander.org/the-iran-war...
The Iran War, inflation and the public finances | FAI
Oil and gas prices have fluctuated significantly since 28 February, but what is undeniable is the increase in levels…
fraserofallander.org
This is such a bizarre column that fundamentally misunderstands what Richard Hughes said at the parliamentary hearing. It's not that the Government can't spend more - of course it can. But what Hughes said was different altogether, and much more sensible observer.co.uk/news/opinion...
Reeves v the OBR: what really happened | The Observer
The former OBR chair has taken aim at the chancellor, but he misunderstands the scope of the watchdog’s role in shaping economic policy
observer.co.uk
1/ This latest piece I've worked on is a reassessment of the implications of some of the OBR's long-term assumptions on indexation and what it means for fiscal sustainability. Key point: fiscal drag is a feature, not a bug, and taxes are already going up even when thresholds are no longer frozen
Fraser of Allander Institute@fraserofallander.org · 8mo agoHow far away is the UK from fiscal sustainability? Read below to find out how fiscal drag and health spending affect these projections, and why the action needed to tackle the issue is smaller than might appear: fraserofallander.org/scotlands-bu...
When ministers say the Scottish Budget is balanced, is it a meaningful statement? Have they been plugging gaps with borrowing and non-recurring funding, including in the ABR? Welcome to our Budget Report preview series - look out for more in January! fraserofallander.org/scotlands-bu...
How balanced is the Scottish Budget? | FAI
It has almost become a ritual – an article of faith that is repeated endlessly in the Scottish Parliament…
fraserofallander.org
1/📄 New working paper www.strath.ac.uk/media/1newwe... On 4 Nov, the Chancellor heavily hinted Labour might break its manifesto and raise income tax. Nine days later: plan dropped, blamed on "better than expected OBR forecasts." Those forecasts were delivered 5 days BEFORE her speech. Thread 👇
strath.ac.uk
Fraser of Allander Institute@fraserofallander.org · 8mo agoThe chaos of the UK Budget showed a broken process. But how can it be fixed? In this blog, our deputy director @joaosousa.bsky.social proposes a way forward: the OBR would first publish its baseline forecast, with a three-week window for Treasury policymaking. Read more below: buff.ly/ErNtglY
Our view - the £22bn headroom is a fiscal fiction. Allowing for fuel duty freezes and discounting non-credible spending cuts, it's more like £15bn - so not much higher than before, and not enough for normal forecast uncertainty
Fraser of Allander Institute@fraserofallander.org · 9mo agoSo much briefing inevitably leads to a Budget that did not have many surprises. But what's the real story behind the spin? Read our initial reaction, and keep checking back over the course of the afternoon and evening for further analysis: fraserofallander.org/budget-2025-...
My view on the two-forecast situation: it's not a time-consistent equilibrium to say there won't be policy accompanying a forecast. With Britain's institutions, the only way to reduce tinkering is to cut fiscal forecasts to one a year www.ft.com/content/921d...
Letter: Here’s how the British economy reduces fiscal volatility
From João Sousa, Deputy Director of the Fraser of Allander Institute, University of Strathclyde; Former Senior Fiscal Analyst, Office for Budget Responsibility, Glasgow, UK
ft.com
As the Chancellor reaches for the smorgasbord option on taxes, why is she in such a pickle? And is her planned headroom enough to avoid coming back next year for more? Read our latest Budget preview below: fraserofallander.org/uk-budget-pr...
UK Budget Preview #3: Eyeing up a smorgasbord | FAI
The UK Budget is still more than a week away, but it feels very long in the tooth already…
fraserofallander.org
This is clever briefing but not actually how OBR forecasts work. The last pre-measures forecast, where this could have been true - was 31 Oct, 5 days before Chancellor's speech. Market determinants were also taken a month ago. This suggest pulling back was the plan all along.
Financial Times@financialtimes.com · 9mo agoThe UK government ditched plans to raise income tax rates after an improved fiscal forecast from the Office for Budget Responsibility, according to people familiar with the matter. Follow our live blog for the latest: on.ft.com/4pc7LC1
What better way to round off our conference than with a look ahead to the 2026 Holyrood election with Professor Sir John Curtice? #FAI50
A really interesting piece from @instituteforgovernment.org.uk - highlighting, as we have discussed at @fraserofallander.org as well, that the real crux of the issue is the looseness of the fiscal stance and inadequate buffer that makes every tiny shock enough to derail policy shorturl.at/uDy1a
Unpleasant fiscal arithmetic has nothing to do with the OBR | FAI
Imagine you’re heading out for a walk. You really want it to be dry, but your weather forecast app says it’s more likely than not that it will rain. You chance it…
fraserofallander.org
Thomas Pope@tompope.bsky.social · 11mo agoLatest from me and @danhaile.bsky.social for @instituteforgovernment.org.uk Higher interest rates, a productivity downgrade and policy u-turns mean perhaps a c.£20bn forecast deterioration at budget How should she respond? 1/2 www.instituteforgovernment.org.uk/comment/rach...
If you think the attack on the Fed's Lisa Cook has nothing to do with you, you're wrong — any one of us may be next paulkrugman.substack.com/p/we-are-all...
We Are All Lisa Cook
Nobody is safe from weaponized government
paulkrugman.substack.com
UK fiscal issues aren't solved by ignoring poor productivity data or abolishing the OBR. Productivity growth has been averaging 0.5% a year. PSNB/GDP has averaged 4.8% since 2000-01, and 5.9% since 08-09. This screams fiscal policy that's too loose, and policy and politicians must reckon with that
Fraser of Allander Institute@fraserofallander.org · 12mo agoIn this week's update, we look at the Chancellor's predicament; why it is time the OBR reflected poor productivity data in its assumptions; and why calls to scrap the OBR fail to address the issue of UK fiscal policy being likely too loose for too long. Read below: buff.ly/A2W3W5i
🚨 We're delighted to announce our (near) final programme for our Economic and Social Policy Conference on the 18th and 19th September, including a new live conference page on our site. Read more: buff.ly/OK8xjug
The Fraser of Allander Institute Economic and Social Policy Conference 2025 | FAI
A few weeks ago, we announced our exciting plans to celebrate the Fraser of Allander’s 50th anniversary. As part of this, we were thrilled to announce that we are hosting our first economic and…
fraserofallander.org
This chart shows the decomposition of the change in the notional deficit from 2023-24 to 2024-25 - devolved spending is clearly the largest factor. Even if devolved revenues grew faster in percentage terms, devolved spending is just much larger a share of the economy
Fraser of Allander Institute@fraserofallander.org · last yr.GERS figures are out! Scotland's net fiscal balance in 2024-25 was estimated to be nearly -12% of GDP, which is about 2% of GDP higher than in 2023-24. The largest driver of this is higher devolved spending - our analysis and reaction to the Scottish Government's statements below: buff.ly/82tgBwo
Firing the BLS Commissioner — the wonk in charge of the statisticians who track economic reality — is an authoritarian four alarm fire. It will also backfire: You can't bend economic reality, but you can break the trust of markets. And biased data yields worse policy.
3/ A much more insightful – though perhaps less cheery – conclusion from looking at the SFC’s forecast is that by 2028-29, funding will be £0.7 billion lower than their central estimate published on 29 May
2/ It essentially assumes that no additional funding would have been made available for the Scottish Government in cash terms relative to that in 2025-26 – which is not a credible baseline
1/ We have seen Labour MPs and MSPs describing the SR event as increasing the block grant by £9.1 billion over the SR period. While Barnett consequentials add up to this, it's a figure that is neither transparent nor helpful
Fraser of Allander Institute@fraserofallander.org · last yr.The SR looks like a rollercoaster ride for public services. Boosts short-term, real-terms cuts in resource and capital in the medium-term; health and defence the main winners. ScotGov budget also grows by less than @scotfisccomm.bsky.social thought 2 weeks ago: fraserofallander.org/2025-spendin...
The SR looks like a rollercoaster ride for public services. Boosts short-term, real-terms cuts in resource and capital in the medium-term; health and defence the main winners. ScotGov budget also grows by less than @scotfisccomm.bsky.social thought 2 weeks ago: fraserofallander.org/2025-spendin...
2025 Spending Review: a rollercoaster ride | FAI
Earlier today, Rachel Reeves announced in the House of Commons the outcome of the Spending Review for both resource and capital budgets across…
fraserofallander.org
1/ As we gear up for the UK Government's main spending review, it's worth pausing and looking at how we have ended up with this slightly bizarre system of ministers settling bilaterally with the Treasury in a sort of zero-sum world where the envelope has already been set
Fraser of Allander Institute@fraserofallander.org · last yr.We are less than a week away from the Spending Review - so what can we expect, and how have we ended up with this strange process? Does it work? Read more below: fraserofallander.org/why-do-we-ha...
