Forecasting the Public Finances in the Treasury

Abstract This article describes the methods used by the Treasury and other government departments for making forecasts of the public finances. A highly detailed approach is required because of the Treasury's budgetary role, but the aggregated results are subjected to careful ‘top‐down’ checks. Forecasts have a necessary role in fiscal policy. But they are subject to large margins of error, and should be presented and used with caution. JEL classification: E6, H1, H6.