Conservative Party (UK) (Photo credit: Wikipedia)

Business Insider reports that OBR is stress testing government finances, as weak wage growth, rising inflation, and rising interest rates, as well as the threat of recession – it all means that public finances are on a worrying trajectory and that’s before the impact of a bad Brexit.

Source: OBR report on government stress testing – Business Insider

This article reminds us that UK finances are still in a mess after the pain of prolonged austerity – remember it was Labour who created the mess with a bare cupboard ahead of the 2008 financial crash. But Conservative policies have not really worked. Austerity has resulted in collapsing public services and now there’s a political need to soften austerity. The Conservatives missed the opportunity for radical reform because they lacked stomach to drive radical change in the public sector.

Imagine the report as the new base case, then you can play tunes with extreme downside scenarios, like the twin risks of a Far Left Labour Government and a very hard Brexit.

Thoughts?