– Andrew Sparrow with all today’s political news, including George Osborne’s ‘autumn statement’ on the state of the UK economy – Read Andrew Sparrow’s lunchtime summary

2.04pm: While I wait for the BBC to catch up, here’s some reaction from Graeme Leach, chief economist at the Institute of Directors. He sounds slightly mystified as to why the forecast for the number of public sector jobs being lost isn’t higher.

The really interesting story from the OBR is the slashing in public sector job losses from 490,000 to 330,000. This means that the projected public-sector employment losses are almost half those seen in the 1990s. The peak-to-trough reduction in public spending in the 1990s was 7.4 per cent of GDP. The comparable reduction now is 7.9 per cent of GDP by 2015-16. So the spending squeeze is on a par with the 1990s but the employment shake-out is far less. This is puzzling, even when we allow for a greater burden of the cuts falling on welfare spending this time around.

Leach also thinks the OBR’s growth forecasts are still a bit optimistic.

The OBR’s 2011 GDP growth forecast still looks a bit optimistic even after the downgrade. We face very strong headwinds next year. Real take-home pay faces a sharp squeeze, and the savings ratio is already very low. Throw in ongoing problems in the financial system and anaemic money supply growth, and our judgment is that the economy will be weaker than expected.

1.58pm: Sky have stopped showing the press conference. BBC News are broadcasting it, but their feed seems to be about five minutes behind Sky’s live coverage.

1.55pm: On the change in the forecast for public sector job cuts, he says there is now around 2.5% more money available to pay for general government employment than the government expected in June, because the government is raising more money from welfare cuts than it was planning at that point.

1.50pm: Robert Chote is winding up now. He says he wants to address whether government policies are consistent with balancing the books over the long term.

Public sector net debt “is comfortably on a downward trajectory”, he says.

But demographic change could put pressure on the budget, he says. The effects of the population will eventually put net debt on an upward path, he says.

(I did not realise the OBR was looking that far ahead. Some of the charts in the reports go up to 2050. Chote seemed to be saying that George Osborne’s sums may add up in the medium term, but in the long run he’s going to have to find more money because we’re all living longer.)

1.41pm: Faisal Islam, Channel 4′s economics editor, has spotted an interesting line in the OBR report. He’s posted this on Twitter :

OBR assumes property prices will fall 2.7% in the next fiscal year.

That’s the Daily Express’s OBR story sorted.

1.40pm: Robert Chote is now talking about the Irish bailout. He says the bilateral loan is the only part of the British contribution that will feature in the national finances. He says the details of the loan were not available when the OBR produced its figures. But the sums involved are too small to make a difference to its overall figures, he says.

1.38pm: Robert Chote is still making his opening statement at the press conference.

General government employment is now expected to fall by 330,000 over the next four years. That’s 160,000 fewer than the figure the OBR produced in June. It has changed its forecast because the government is now saving more money than expected at the time of the budget from welfare cuts. But the OBR is predicting a further loss of around 80,000 government jobs in 2015-16.

The deficit is expected to fall from 11.1% of GDP this year to 1% by 2015-16, Chote says.

The forecast for debt is marginally lower than it was in June. But it will still peak at around 70% of GDP.

1.31pm: Robert Chote is summarising his findings at the press conference. I’ve mentioned some of the key findings already.

Forecasts for net borrowing have changed “only modestly”, Chote says.

The government has a “better than 50%” chance of meeting the borrowing targets it has set itself, he says.

On current evidence, the government’s fiscal consolidation is consistent with the targets it has set itself (to eliminate the deficit), consistent with modest growth, Chote says. But he says deciding whether the government is cutting the deficit too quickly is a matter that is beyond the remit of the OBR. He concedes that this is an issue on which there is disagreement.

The recovery will be slower than in the 1970s, the 1980s and the 1990s, Chote says.

1.25pm: Here’s more from the OBR report:

– The economy has recovered “more strongly” since the spring than the OBR expected in June.

– Growth will be “relatively sluggish” during the medium term.

Our central forecast is that the economy will continue to recover from the recession, but at a slower pace than in the recoveries of the 1970s, 1980s and 1990s. This relatively sluggish medium-term outlook reflects the gradual normalisation of credit conditions, efforts to reduce private-sector indebtedness and the impact of the government’s fiscal consolidation.

– Growth will be at its slowest in the first quarter of next year, when it will be 0.3%.

– Unemployment will rise to just over 8%, on the ILO measure, next year. Then it will fall to just over 6% by 2015.

– Employment will rise from 29 million this year to 30 million in 2015 “as private sector job creation more than offsets falling public sector employment”.

Robert Chote, the new head of the OBR, is now holding a press conference.

1.13pm: Here are the Press Association snaps about the OBR report:

The Office for Budget Responsibility lifted its 2010 forecast for UK economic growth from 1.2% to 1.8% today but lowered its estimates for 2011 and 2012 from 2.3% to 2.1% and 2.8% to 2.6% respectively.

The OBR slightly lowered its forecast for public borrowing in the current 2010-11 financial year to £148.5bn from £149.5bn.

The OBR slashed its forecast for public sector job losses over the next four years from 490,000 to 330,000.

And here’s the top of the PA story:

The outlook for the economy is “inherently uncertain” and recovery will be slower than after previous recessions, the UK’s tax and spending watchdog warned today.

The Office for Budget Responsibility said the impact of government deficit-busting measures – which include a hike in VAT to 20% and an £81bn package of spending cuts – would lead to “sluggish growth” in the medium term.

The new report, Economic and fiscal outlook, is now on the OBR’s website .

12.54pm: The Office for Budget Responsibility is due to release its revised economic forecasts at 1pm. They should be available on the OBR’s website after 1pm. At 1.20pm the OBR is hosting a news conference.

Here’s the report it produced at the time of the budget in June .

12.41pm: Here is a lunchtime summary:

– Downing Street has condemned the release of confidential US government information by Wikileaks. “Clearly, we condemn the unauthorised release of classified information,” the prime minister’s spokesman said. “The leaks and their publication are damaging to national security in the US, Britain and elsewhere.” (See 11.53am.)

– More than 100 Liberal Democrat activists who stood as candidates at the general election have signed an open letter saying the party will “rightly face many more years back in the political wilderness” if Lib Dem MPs break their promise to vote against an increase in tuition fees. As Patrick Wintour reports in the Guardian today , Simon Hughes is trying to persuade his colleagues to abstain, although Lib Dem ministers are under pressure to vote in favour of the government’s plans. (See 9.31am.)

– Ed Vaizey, the culture minister, has announced that the British Film Institute will take responsibility for distributing grants to British filmmakers following the abolition of the UK Film Council. (See 12.14pm.)

12.14pm: Ed Vaizey, the arts minister, announced today that the British Film Institute will become “the flagship body for the delivery of UK film policy”. He also said there would be a 60% increase in lottery funding for film by 2014. My colleague John Plunkett has a story about this on the Guardian’s website , the culture department’s press notice is here , and the full text of Vaizey’s speech is here .

12.07pm: Lord Mandelson (left) is launching an international consultancy. Sky’s Mark Kleinman has broken the story and he’s got more details on his blog:

Global Counsel LLP, which is expected to be chaired by Lord Mandelson and run by Ben Wegg-Prosser, a long-standing ally of the former Labour minister, has secured a significant investment from WPP Group, the FTSE 100 marketing services giant, I’m told.

The news will end six months of speculation about Lord Mandelson’s post-ministerial career. Global Counsel will advise multinational companies, and I suspect that one of its focuses given his background will be on exploiting opportunities in the world’s growth markets (particularly in Africa, Asia, Latin America and parts of eastern Europe – which dovetail neatly with WPP’s own priority regions for expansion).

11.53am: I’m just back from the No 10 lobby briefing, where the prime minister’s spokesman said the government “condemned” the latest release of US classified material by Wikileaks.

Clearly, we condemn the unauthorised release of classified information. The leaks and their publication are damaging to national security in the US, Britain and elsewhere … Governments need to be able to operate on a confidential basis when dealing with this kind of information and the fact that it has been leaked is damaging.

But the prime minister’s spokesman was not willing to identify any specific leak that may have caused any specific damage to the national interest. When pressed on this, he repeated his general point about the release of information like this undermining confidentiality. He also said that leaks like this “have the potential to damage national security”.

The spokesman also refused to say what David Cameron felt about the news that he had been criticised in the US files. The American ambassador, Louis Susman, briefed Downing Street officials about the leaks at the end of last week, but he did not speak to Cameron, and Cameron has not spoke to Barack Obama about the affair.

10.35am: You can read all today’s Guardian politics stories here . And all the politics stories filed yesterday, including some in today’s paper, are here .

As for the rest of the papers, I’ve already mentioned the FT’s interview with Alan Johnson (see 10.02am). Here are some other articles of interest.

– Duncan Gardham in the Daily Telegraph says the government is likely to cut the maximum limit for pre-charge detention for terrorist suspects from 28 days to 14 days when it concludes its review of counter-terrorism legislation. But control orders are likely to stay in a “refashioned” form.

Theresa May, the Home Secretary, is attempting to hold on to a refashioned version of control orders despite opposition from Liberal Democrats led by Nick Clegg, the Deputy Prime Minister.

The Government is conducting a review of terrorism legislation introduced in the wake of the September 11 attacks but the results have been delayed as the Government examines “every option known to man” to head off a Liberal Democrat revolt, according to one source.

It is understood that Mr Clegg believes control orders – the system of curfews under which terrorism suspects are electronically tagged – should be abolished while Mrs May, who has had extensive briefings from the security services and the police, thinks they must be retained.

The row threatens to split the Coalition if Mr Clegg decides to give his backbenchers a free vote.

– And Lord Carlile, the government’s independent reviewer of terror legislation, suggests in the Daily Telegraph control orders could be replaced by a three-tier system. He has already submitted this idea to ministers.

First, for those who simply want to travel abroad to train as terrorists, we could have foreign travel restriction orders founded on a raised standard of proof of ”reasonable belief” that the individual wishes to leave the UK for purposes connected with training a terrorist.

Second, we could have general travel restriction orders on reasonable belief that the individual has the more developed intent to participate in terrorist activity.

Third, for the most serious cases we could have activity restriction orders, where a judge was satisfied on the much raised standard of the balance of probabilities that the individual is a terrorist. The system would have an increasing scale of restrictions, including curfews (but not compulsory relocation) for the highest tier.

– George Parker in the Financial Times (subscription) says Liam Fox has dropped his pre-election promise to withdraw Britain from the European Defence Agency.

But Mr Fox has written to Lady Ashton, head of the agency, warning that Britain will block proposals for a 3.9 per cent rise in its budget next year, claiming it was “impossible to justify” at a time of austerity.

Although the EDA has a relatively small budget, Mr Fox has always viewed it as an unacceptable reflection of the expanding ambitions of Brussels. However, Mr Fox’s aides confirmed on Sunday that he was no longer committed to an immediate British withdrawal from the agency, although the UK’s longer-term membership was under review.

– Louise Armitstead and Harry Wallop in the Daily Telegraph say the government will today try to persuade companies to stay in Britain “by pledging an immediate reform of two corporate taxes that are blamed for driving businesses overseas”.

George Osborne, the Chancellor, and Vince Cable, the Business Secretary, are planning to announce the overhaul of the Controlled Foreign Companies tax and a lower rate for income generated from Intellectual Property.

Some of Britain’s biggest companies including WPP, the advertising group, and Shire, the pharmaceuticals company, recently moved their headquarters to Ireland citing the complicated and uncertain company tax regime as the main reason.

I’m now off to the Downing Street lobby briefing. I’ll post again after 11.30am.

10.22am: The cabinet is meeting today. It normally meets on a Tuesday, but the date has been changed because David Cameron is going to Zurich tomorrow to lobby on behalf of England’s 2018 World Cup bid. He’s going to be there for the best part of three days, although he is planning to nip back for PMQs on Wednesday.

10.02am: I’ll post a full review of the papers shortly, but Alan Johnson’s interview in the Financial Times (subscription) merits special attention because it’s full of good material. Here are the key points.

– Johnson said he would like Labour to cut taxes.

I’d like to see us reduce taxes. I’d like to see us reduce it for middle-income and low-income people.

– But he suggested that Labour would want to keep the 50p top rate of tax at the election.

It’s very difficult to imagine we won’t need a 50p tax rate. We need it now. It’s very difficult to imagine we won’t need it at the time of the next general election but, as Ed [Miliband] says, we’ll look at it at the time.

– He predicted that the more the public saw of Miliband, the more they would like him.

I think they’ll tune into Radio Ed and find something they really like.

– He said he would take his time before developing policy on issues like breaking up the banks. In the meantime, he would stay quiet on these issues, he said.

I’m a great believer in the philosophy that if you’ve not got anything to say, keep your mouth shut.

– He revealed what was on his economics reading list. When he got the job, Johnson joked about needing to read an economics primer. But actually he briefed himself by reading the Financial Times summer series about the respective merits of austerity policies versus stimulus policies.

9.46am: The Labour MP Margaret Hodge was on the Today programme earlier talking about how she defeated the BNP in Barking at the election. The campaign is the subject of a documentary, The Battle for Barking, which is on More4 tomorrow. According to PoliticsHome, Hodge said that “reconnecting with voters” and focusing on issues like potholes helped her to see off Nick Griffin.

What I did, because there was nothing I could do about immigration and there was nothing I could do about magicking up the jobs and the housing that created massive anger and frustration … everything I did was about reconnecting Labour with our local people … We do our politics now in a different way. I listened to what people have said and even if I can’t deliver on the big issues, I can deliver on things like potholes, pavements.

9.31am: As the BBC has been reporting, more than 100 people who stood as Liberal Democrat candidates at the last election have signed an open letter urging Lib Dem MPs to vote against the rise in tuition fees. The letter, which is on Derek Deedman’s website, explains very directly why breaking the pre-election promise to vote against any tuition fee increase would be so damaging to the party.

There is one thing that sets the Liberal Democrats apart from other political parties; this is that when we say we will do something during election campaigns we then do it in government. This can be seen in how the income tax threshold will rise to £10,000 by the end of this Parliament, the AV referendum on 5th May 2011, the reduction of MP’s to 600, the Pupil Premium and the delay over the replacement of Trident. We have achieved this and more despite the compromises of being in a coalition.

Nick Clegg emphasised this best of all during the televised leadership debates when he said that the Labour and Conservative Parties have given us “Nothing but broken promises”, he also emphasised that “The Liberal Democrats are different”. Finally and crucially he announced how he wanted to create a “New politics” and part of this vision was for parties to do in government as they claim they will in opposition …

We are different and must show that we are; especially now that we are in a position to do so. Otherwise this party will rightly face many more years back in the political wilderness having been labelled as ‘just like the other lot’.

9.21am: Even though half the country is covered in snow and it feels as if we are in the depths of winter, George Osborne has decided that today’s the day to deliver an ” autumn statement “. He will be the first chancellor to deliver one since Norman Lamont in 1992. By law the government has to deliver a financial report on the state of the economy twice a year. Chancellors used to do this in the autumn, and they would use the autumn statement to announce departmental spending allocations. Then Kenneth Clarke combined the autumn statement with the spring budget, because he thought it made more sense to announce tax and spending decisions at the same time, although he also made a summer statement about the economy to comply with the “twice a year rule”. When Labour came to power, Gordon Brown replaced the autumn statement with a pre-budget report, effectively a mini budget. Today, under Osborne, the autumn statement is back.

Osborne will deliver his statement at 3.30pm. Unlike Lamont, he won’t be publishing departmental spending allocations. He has already done that, in the comprehensive spending review. Instead he will be responding to the Office for Budget Responsibility, which at 1pm will be publishing its revised economic forecasts. As Patrick Wintour reports in the Guardian today , the OBR will raise the estimate of 2010 growth from the 1.2% contained in the June budget to close to 1.8% and cut projections for public-sector job cuts by nearly a fifth. Osborne will also publish a growth discussion paper.

Otherwise, it’s a relatively quiet day. The Wikileaks story is, of course, huge, but largely I’ll leave that to my colleague Matthew Weaver, who is covering it in a live blog . I’ll focus on the breaking political news, as well as looking at the papers and bringing you the best politics from the web. George Osborne Economic policy Andrew Sparrow guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds

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