Budd surprises City as he confirms he will quit as OBR head

SIR Alan Budd, head of the UK government's new fiscal watchdog, will not stay on when his three-month contract expires at the end of July.

Although the 73-year-old's appointment at the Office for Budget Responsibility (OBR) was on an interim basis, he had widely been expected to stay on until it was set up on a permanent basis.

Budd is yet to report back to the Treasury on his recommendations for the future of the OBR and his departure comes just months before the body, set up by new Chancellor George Osborne, is due to scrutinise the UK government spending review in the autumn.

A Treasury spokesman said it had "always been the case that Sir Alan planned to leave in the summer", although it has not yet begun the search for his replacement.

The spokesman added: "He was appointed to provide forecasts for the emergency Budget and to advise on the establishment of a permanent OBR.

"He has established the OBR as a credible, independent body and the Chancellor is incredibly grateful for his important work on this issue.

"The UK government will seek to ensure continuity for the OBR in recruiting Sir Alan's successor."

The launch of the OBR was one of the first acts of the new coalition government, to scrutinise fiscal policy and provide independent growth and borrowing forecasts.

It was launched on an interim basis before the emergency Budget and does not become permanent until it is enshrined in law with a legal mandate.

The OBR is led by a three-strong committee, with Budd, a founding member of the Bank of England's monetary policy committee, aided by former Royal Bank of Scotland chief economist Geoffrey Dicks and Graham Parker, who used to head up the Treasury's public finances team. They are on three-month contracts but are expected to stay.