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CPO notes

No. 12 - June 2025

Public revenue forecasting in Europe: what role for inde-

pendent fiscal institutions?

This note was prepared by Xavier Debrun, Head of the Research Department at the National Bank of Belgium

and former member of the European Budget Committee, as well as Galaad Defontaine and Charlotte Poulon,

auditors at the Cour des Comptes. It was endorsed by the Conseil des prélèvements obligatoires (CPO) on the

May 2025

Credibility is essential to the effectiveness of macroeconomic policies in general and fiscal policy in particular.

By credibility, one means that economic agents

–

and financial market players in particular

–

have no doubt

about a government's commitment to meeting its financial obligations under all circumstances. This commit-

ment makes public debt securities "risk-free" assets. This status as a high-quality borrower enables the State

to raise the funds it needs to finance its actions at any time and at the best price. Thus, without credibility, the

public authorities would lack the room for man

uvre they need to protect the economy from unforeseen

events that could disrupt its trajectory.

The credibility of economic policy decisions is generally based on a legal framework that combines rules and

independent institutions. The rules aim to establish a scope of action consistent with the main commitment.

The independent institutions, for their part, provide the technical expertise needed to take decisions in line

with the commitments. In monetary matters and in the regulation of certain sectors, these independent insti-

tutions exercise direct decision-making power within the limits of a mandate strictly defined by the political

authorities. For fiscal policy, which cannot be delegated to non-elected bodies, credibility depends mainly on

compliance with rules restricting the accumulation of public debt, such as numerical limits on debts and defi-

cits. For eurozone countries, this means the Stability and Growth Pact, in force since 1999 and reformed in

April 2024, and national rules, required since 2011. In addition to the Treaty on Stability, Coordination and

Governance (TSCG) of 2 March 2012, which provided the initial impetus, a European regulation of 2013 obliges

States using the euro to establish independent fiscal institutions (IFIs). These bodies must ensure that the

budget complies with European and national budgetary rules and ensure the quality of the forecasts underly-

ing the preparation of the budget.

Public revenue forecasts are an essential component of a government's financial framework. This forecast

determines the resources available for public spending and is therefore the basis for any commitment to a

fiscally sustainable path. In several European countries, including France, significant discrepancies between

forecasts and actual revenues have been observed since the health crisis. These forecasting errors have af-

fected budget execution, resulting in major deviations in relation to public deficit targets. A loss of confidence

Mr Moscovici, First President of the Cour des Comptes, President of the CPO and of the HCFP, and Mr Carnot, member of the CPO

until his appointment as maître conseiller en service extraordinaire at the Cour des Comptes and general rapporteur to the HCFP, did

not attend the meeting. Marie-Christine Lepetit did not take part in the vote. The Treasury's Directorate General was able to comment

throughout the Council's examination of the memorandum.

Public revenue forecasting: who does what in Europe?

in the soundness of budget forecasts would weaken the anchoring effect of budgetary rules, thereby threat-

ening the credibility of budgetary policy itself. It is therefore important to dispel doubts about the robustness

of forecasting procedures and to ensure the transparency of their preparation. In its opinion on the draft law

on the results of management and approval of the accounts for 2024, issued on 30 April 2025, the Haut Conseil

des Finances Publiques (HCFP) called on "the Government and the organic legislator to consider any additional

provision that would ensure the absence of bias in the preparation of forecasts".

The comparison of several European countries in this report is based on the CPO's expertise in international

comparisons of the economic, social, budgetary and financial impact of all taxes and social security contribu-

tions

It is based on the principle that a robust revenue forecasting procedure should leave no room for doubt

about the possible politicisation of an exercise which, by its very nature and in comparable countries, is a

technical exercise. If budgetary choices are the expression of political orientations, the development of eco-

nomic and fiscal assumptions must, from the outset, be based on solid, transparent and shared methodolo-

gies, as well as on the judgement of experts protected from any political pressure or injunction. For all coun-

tries, the ultimate aim is not so much to reduce forecasting errors to zero - an impossible mission - but to

improve their accuracy and eliminate any bias, or even the perception of bias, in order to guard against the

risk that these deviations might threaten the credibility of fiscal policy.

One way to meet

this requirement is through the involvement of independent fiscal institutions (IFIs). This

explains the requirement for all eurozone Member States to have one (or more) IFIs responsible for reviewing,

validating, or in some cases producing, macroeconomic and fiscal forecasts. In France, the HCFP is responsible

for assessing the plausibility of the government's macroeconomic and public finance forecasts and for ensuring

that public finance forecasts align with the financial legislation adopted and France's European commitments.

However, its role and powers are more limited than those of similar institutions elsewhere in Europe, partic-

ularly in the area of forecasting.

Against this backdrop, and given the concerns raised by repeated revisions to public revenue forecasts, the

public authorities are considering ways of strengthening the HCFP's mandate and resources. The Government

(via a scientific committee of experts), the Senate (through a fact-finding mission) and the National Assembly

(via a commission of inquiry) have each launched their own initiatives

, and an action plan to improve revenue

forecasting in France was presented on 3 March 2025 by the Government.

To identify best practices in Europe, this

Note

from the Conseil des prélèvements obligatoires analyses the

role and resources of IFIs in Europe, with a particular focus on revenue forecasting (

. It includes a literature

review to identify the characteristics IFIs must have to fulfil their role effectively, and empirically assesses their

influence on long-term revisions to public revenue forecasts (

) before proposing a set of best practices to

guide the revision of the HCFP's mandate, with the aim of restoring confidence in tax forecasting in France (

Cf.

recommandations_comite_scientifique_previsions_finances_publiques.pdf

;

Mission d'information sur la dégradation des fi-

nances publiques depuis 2023, son suivi par l'administration et le Gouvernement et les modalités d'information du Parlement sur la

situation économique, budgétaire et financière de la France | Sénat

;

Enquête sur les variations et les écarts des prévisions fiscales et

budgétaires 2023-2024 : publication du rapport - Commission des finances - Assemblée nationale

CPO Note n

11, March 2025

1. Independent fiscal institutions (IFIs) play

an increasingly important but uneven role

in public finance forecasting..

With a few exceptions

, macroeconomic and pub-

lic finance forecasting were for a long time mainly

the responsibility of government central financial

authorities, which traditionally held this responsi-

bility

. This monopoly was sometimes accompa-

nied by overly optimistic official projections, with

governments tending to overestimate economic

growth and expected revenues. Against this back-

drop, over the last few decades many European

countries have established independent fiscal insti-

tutions (IFIs) to enhance the reliability of these

forecasts

. The exact role of these IFIs varies con-

siderably from country to country, depending on

their legal mandate and the national institutional

framework

. Some have a strong legal basis (or-

ganic or even constitutional law

, as in Italy), while

others are the result of informal practices or gov-

ernment-led initiatives that predate any European

framework, as in the Netherlands. Similarly, their

involvement in the preparation of forecasts differs:

in some countries, the IFI itself produces the mac-

roeconomic and public finance forecasts on which

the budget is based, while in others it confines it-

self to validating (approving) or critically assessing

the forecasts prepared by the government. The

varying resources and working methods of the IBIs

reflect differences in mandates. The Conseil des

prélèvements obligatoires conducted a series of in-

terviews and discussions with representatives of a

panel of European IBIs (Annexes 1 and 4), on which

the analysis below is based.

1.1. The legal and institutional framework of

independent fiscal institutions varies consid-

erably from one State to another.

See the Belgian and Dutch cases below.

In a number of European countries, however, there were al-

ready bodies where the consensus of economists could be dis-

cussed, such as in France the Commission des Comptes et des

Budgets Economiques de la Nation, which was set up in 1952

and became the Commission Economique de la Nation in

1999.

See for example Roel Beetsma, Xavier Debrun, Xiangming

Fang,

et al. "

Independent fiscal councils: Recent trends and

performance",

European Journal of Political Economy

, 2019,

vol. 57, pp. 53-69; Kopits, George, ed.

Restoring public debt

Independent fiscal institutions have a wide variety

of legal status in Europe.

Several IBIs have been established by texts

through instruments at the highest level of the le-

gal hierarchy - constitution or organic law - re-

flecting a desire to give them strong legitimacy

and independence from the outset.

This is the

case, for example, in Italy, where the

Ufficio Par-

lamentare di Bilancio

(UPB) was created in 2014

and enshrined in constitutional law, or in France,

where the HCFP was established by the organic law

of 17 December 2012. Similarly, in Spain, the

Au-

toridad Independiente de Responsabilidad Fiscal

(AIReF) is defined by Organic Law 6/2013 as an in-

dependent administrative authority. In the United

Kingdom, a country without a written constitution,

the Office for Budget Responsibility

(OBR) was es-

tablished by the

Budget Responsibility & Audit Act

of March 2011 with the specific aim of restoring

confidence in budget forecasts. The academic liter-

ature highlights that these choices depend as much

on the institutional context as on political and cul-

tural factors such as confidence in the institutions

and the quality of governance of public finances.

While European law has required a legal basis for

the functional autonomy of IFIs since 2013, the in-

dependence of certain older institutions was

sometimes based on regulatory texts, or even on

practice alone.

In the Netherlands, the Central

Planning Bureau (CPB), founded in 1945 by a sim-

ple government decree, produced official eco-

nomic forecasts for decades, initially without any

formal legal framework. Similarly, Denmark and

Sweden have set up independent consultative bod-

ies by simple government decision. However, these

two countries have demonstrated strong commit-

ment to sound public finances and enjoy a high

level of public confidence in public institutions.

These differences often reflect the specific fea-

tures of the political systems and the administra-

tive structure of public finances in each State

sustainability: the role of independent fiscal institutions

. OUP

Oxford, 2013.

European Fiscal Board,

Annual Report

, 2024.

See for example Cristina Fasone. "The Constitutional Role of

Independent Fiscal Institutions in the Eurozone."

German Law

Journal,

2022

23, no. 2, pp. 257-79.

Martin Larch, Andrea Cubells Enguídanos, Laszlo Jankovics,

"The independence of fiscal councils in the EU",

VoxEU CEPR

7 June 2024.

See Larch et

(2024), quoted above.

Public revenue forecasting: who does what in Europe?

Some IFIs are specialised independent administra-

tive authorities, such as the UK's OBR or Spain's

AIReF. In other countries, the IFI may be attached

to another independent government body. For ex-

ample, the French HCFP is attached to the Cour des

Comptes, an independent court, the Austrian

Fiskalrat

is administratively attached to the Central

Bank, and the Italian UPB is attached to Parliament.

In the Netherlands, the CPB, an economic planning

body, has for a long time been responsible for fore-

casting. The specific case of Finland illustrates an

intermediate solution, with an internal forecasting

unit within the ministry that enjoys guarantees of

independence. In particular, its head is protected

from any political intervention.

Territorial structure also influences the status of

IFIs.

In federal or regionalised states, several enti-

ties may be involved. In Belgium, the governance

of economic forecasts revolves around the Federal

Planning Bureau (FPB), an independent public in-

terest body responsible not only for macroeco-

nomic forecasting but also for demographic, en-

ergy and transport projections and for assessing

the macroeconomic impact of structural reforms

and exogenous shocks (oil and gas prices). Twice a

year, the FPB produces macroeconomic forecasts

and a revenue forecast on a no-policy-change ba-

sis. The Supreme Finance Council (SFC) issues

ex-

ante

opinions on budgetary targets and

ex-post

opinions on the budgetary execution of the Federal

State and the regions, and can activate corrective

mechanisms in the event of significant deviations.

However, with a limited number of staff (1.5 FTEs),

the FSB often relies on analysis provided by the Na-

tional Bank of Belgium, whose Governor chairs the

FSB

ex-officio

. In Spain, the AIReF is also involved in

the forecasting process by independently recalcu-

lating the macroeconomic outlook underlying the

national and regional budgets. This role ensures

consistency between the forecasts of the federal

Of the eight countries examined, only the United Kingdom

is not party to the TSCG.

Article 2 of Regulation 473/2013 of the European Parlia-

ment and of the Council of 21 May 2013 laying down common

provisions for the monitoring and evaluation of draft budget-

ary plans and for the correction of excessive deficits in euro

area Member States defines an independent body by a set of

criteria. These are "Bodies that are structurally independent

or enjoy functional autonomy from the budgetary authorities

of the Member State, and that are based on national legal pro-

visions guaranteeing a high level of functional autonomy and

accountability, including: (i) a statutory regime anchored in na-

tional law, regulations or binding administrative provisions; (ii)

government and those of the autonomous commu-

nities, by providing a critical view of the assump-

tions used by the executive.

1.2. The European framework has largely

contributed to shaping the role and missions

of IFIs within national public finances.

The Treaty on Stability, Coordination and Govern-

ance (TSCG) of 2 March 2012 introduced the re-

quirement for each signatory State

to establish

an independent body responsible for ensuring

compliance with budgetary discipline

. Regulation

473/2013 of the '

Two Pack

' clarified the definition

and role of these bodies: since 2013, eurozone

Member States have must base their budgets on

macroeconomic forecasts "produced or endorsed

by independent bodies"

. Thus, Article 4 of Regu-

lation 473/2013 requires that the macroeconomic

scenario underlying draft budget bills be either

drawn up by an independent body or formally val-

idated by one

. This reform has led to the creation

or strengthening of IBIs in many countries. Today,

all EU Member States have an IFI. Poland is the ex-

ception, although an internal debate is underway

on this point.

The mechanism of "endorsement" of the macroe-

conomic forecast - i.e. the formal approval by the

IFI of the growth scenario adopted for the budget -

is now at the heart of the intervention of most Eu-

ropean IFIs. In accordance with the

Two Pack

, this

endorsement is in theory binary (agreement or re-

fusal) and conditions the validity of the budget.

This role of endorsing the macroeconomic forecast

has a direct impact on revenue forecasts: it is the

credibility of growth, inflation, and wage assump-

tions that underpins the reliability of projected tax

revenues.

Nevertheless, the forecasting mandates of IFIs

across the eurozone vary significantly

. Only a few

a prohibition on taking instructions from the budgetary au-

thorities of the Member State concerned or from any other

public or private body; (iii) the ability to communicate publicly

in a timely manner; (iv) procedures for appointing members

based on their experience and competence; (v) sufficient re-

sources and appropriate access to information in order to

carry out their mission. "

László Jankovics and Monika Sherwood, "Independent Fiscal

Institutions in the EU Member States: The Early Years",

Euro-

pean Economy Discussion Papers

, DG ECFIN, June 2017.

CPO Note n

11, March 2025

countries - which have historically had an inde-

pendent forecasting organisation - have adopted a

model in which the IBI directly produces the official

macroeconomic forecasts used by the govern-

ment. According to data from the European Budget

Committee, 5 out of 19 eurozone countries (Aus-

tria, Belgium, Luxembourg, the Netherlands and

Slovenia) have maintained or adopted this out-

sourcing model for macroeconomic forecasting.

Most of these countries rely on institutions that

have long been recognised for their expertise and

the reliability of their forecasts, such as the Dutch

CPB or the Austrian

Österreichisches Institut für

Wirtschaftsforschung

(WIFO)

Most other institutions focus on assessing and

validating the macroeconomic forecasts provided

by the executive, comparing them with forecasts

from other institutions and, where appropriate,

with their own.

The approach is generally part of

an iterative process: upstream, the IFI examines

the growth assumptions, exchanges views with the

government and may request revisions before is-

suing its formal opinion.

In Spain, the AIReF receives the preliminary macro-

economic projections from the State and the 17

Autonomous Communities in July, to allow it to ex-

amine and approve them before they are finally in-

corporated into the preliminary draft regional

budgets. It may withhold approval of the macroe-

conomic framework of a budget (national or re-

gional). Its reservations must then be addressed

through corrective measures or public explana-

tions from the authority concerned within one

month. In Italy, the UPB receives the government's

projections in March. It must validate the macroe-

conomic forecasts contained in the

Documento di

economia e finanza

(DEF) and its updates. Once the

Finance Bill has been submitted to Parliament, it

publishes a detailed analysis of the budget

measures and their fiscal impact on public revenue

and expenditure.

More specifically, public revenue forecasts are

relatively rarely produced directly by the IFIs.

practice, only a few IBIs - generally those already

responsible for macroeconomic forecasting - pre-

pare revenue forecasts independently. This is the

Among the recently created institutions, the most notable

to produce its own forecasts is the British OBR, whose inter-

vention is not, however, part of the implementation of the Eu-

ropean Union's public finance framework.

case in the UK, where the OBR produces all reve-

nue and expenditure forecasts for the government.

In Austria, the

Fiskalrat

has its own model simulat-

ing over 50 categories of public revenue. Portugal's

Public Finance Council (CFP) forecasts revenues

from eight taxes on a no-policy-change basis. In the

Netherlands, the Council of State (

Raad van State

)

is responsible for assessing the budget's compli-

ance with European budgetary rules. To do this, it

uses the forecasts of the Central Planning Bureau

(CPB).

The vast majority of other countries have adopted

an independent validation model

: the forecast is

still drawn up by the Ministry of Finance, generally

the Treasury, but must be reviewed and endorsed

by the IFI before being finalised.

The "

comply or explain

" principle is designed to dis-

courage any deviation from the IFI's recommenda-

tions. If the government decides not to follow the

IFI's advice (for example, by maintaining a con-

tested forecast), it must expressly explain the rea-

sons, either before Parliament or in writing budget

documentation. This principle, introduced by the

TSCG in 2012, is intended to increase the account-

ability of the Executive and prevent unjustified di-

vergences from independent assessments. In Italy,

for example, the UPB has on several occasions re-

fused to endorse the government's growth fore-

casts, judging them overly optimistic. During the

2016 budget review, the Italian government was

required to provide detailed explanations in its

budget documents to justify maintaining its initial

economic assumptions. In the UK, where there is a

significant divergence between official projections

and independent assessments, the OBR requires

the government to revise its assumptions and pro-

vide detailed explanations. In September 2022, a

clear attempt by the government to bypass the

OBR with a surprise announcement of massive tax

cuts triggered turmoil in financial markets, ulti-

mately lea

ding to the collapse of Liz Truss’s govern-

ment on the 20th October 2022.

In some eurozone countries

—

notably France

—

IFIs have a more limited mandate.

The Portuguese

Public Finance Council (CFP) does not explicitly val-

idate but instead critically assesses the govern-

ment’s forecasts, comparing them with its own

Public revenue forecasting: who does what in Europe?

analysis and that of third-party institutions such as

the Bank of Portugal, the European Commission,

and the IMF. In France, the HCFP examines the re-

alism of macroeconomic, revenue and expenditure

forecasts in financial texts, the consistency of pub-

lic finance forecasts with financial texts and

France's European commitments, and issues a non-

binding opinion without proposing alternative fig-

ures. In Germany, the coordination of forecasts is

based on close collaboration between the Federal

Ministry of Finance and the

Länder

, which, through

consultation processes, jointly validate and adjust

the budget projections before undergoing inde-

pendent validation by the

Beirat des Stabilitäts-

rates

(an advisory committee of independent ex-

perts operating under the Stability Council, which

has been enshrined in the Basic Law or

Grundge-

setz

since 2010).

Three broad models coexist in Europe, with sev-

eral hybrid or intermediate variants:

- IFIs, that produce forecasts used to prepare both

medium-term budget framework and annual

budgets;

- those that explicitly validate government fore-

casts ;

- and finally, IFIs like the HCFP, which only provide

critical assessments of government forecasts.

1.3. European IFIs use a variety of methods

to fulfil their mandate

In countries where the independent institution

produces its own macroeconomic and fiscal fore-

casts, these are generally based on complex econ-

ometric models and extensive in-house expertise.

The UK OBR produces a detailed

Economic and Fis-

cal

Outlook twice a year, covering more than 30

taxes and contributions, in close collaboration with

HM Revenue and Customs (HMRC), which provides

the necessary models and data. In the Netherlands,

the CPB updates its macroeconomic framework

twice a year, incorporating planned tax measures

in order to estimate their macroeconomic feed-

back effects on the economy. The Austrian IFI com-

bines two levels of expertise. On the one hand,

WIFO has been forecasting growth and the macro-

economic base (GDP, employment, etc.) for almost

a century. Secondly,

Fiskalrat

maintains an internal

revenue forecasting model covering most taxes

(over 30 taxes, 8 social contributions, etc.) used to

project expected tax revenues. These quantitative

approaches enable the IFIs to formulate compre-

hensive autonomous projections, which can be

used either directly as the budget baseline

—

as in

the UK and the Netherlands

—

or as a benchmark

scenario for assessing the accuracy of government

forecasts, as is the case in Austria, where the

Fiskalrat

's projections form a framework for those

of the government.

Conversely, many IFIs only play an expert forecast-

ing role and rely on benchmarking methods rather

than building their own forecasting models. In the

absence of sufficient resources, these institutions

compare government forecasts with those of other

independent bodies, such as economic research in-

stitutes or international organisations, in order to

check their consistency. For example, even though

the HCFP has a number of counter-expertise tools

at its disposal, it assesses the government's as-

sumptions on the basis of available forecasts from

the European Commission, the IMF, the OECD and

the consensus of economists. Similarly, the budget

councils of certain countries such as Cyprus, Esto-

nia, Lithuania and Malta use external forecasts as

their main reference for judging the realism of of-

ficial scenarios. This

benchmarking

method allows

to detect any excessive optimism without neces-

sarily having a sophisticated econometric model. It

is often accompanied by sensitivity analyses and

tests of alternative scenarios, in order to assess the

risks weighing on the achievement of revenues,

such as the impact of lower-than-expected growth

on tax revenues.

Between these two extremes, some IFIs produce

forecasts themselves and have to validate govern-

ment forecasts by combining internal modelling

and external expertise. For example, the Italian IFI

(UPB) has a team of economists who use their own

models to check the plausibility of government

forecasts, while consulting a panel of independent

institutes to situate the official scenario in relation

to other projections from the private sector or pub-

lic bodies. Similarly, the Spanish AIReF itself recal-

culates the macroeconomic outlook underlying the

national and regional budgets so that it can ap-

prove or reject them with complete objectivity. To

do this, it has around 70 experts and its own econ-

ometric tools, covering GDP and public revenue

trajectories over the short, medium and long term.

This technical capacity enables it to formulate an

independent judgement on each regional budget

and on the central government budget, including,

where necessary, by producing a no-policy-change

CPO Note n

11, March 2025

forecast of public finances when a region does not

provide sufficient information on its new tax

measures.

Most IFIs rely on a Scientific Advisory Board to

strenghten and validate their analytical work

Comprising recognised academics and representa-

tives from public institutions, this board provides

an external perspective that complements that of

the in-house teams. Its members are generally ap-

pointed for several years on the basis of their skills

and past experience. This is the case in Spain, for

example, where the AIReF has an advisory board

responsible for issuing opinions, mainly on the

evaluation of cross-functional policies. The role of

the council is exclusively deliberative and technical

on issues submitted for consultation by the presi-

dent of the AIReF. It consists of 9 members from

academia.

1.4. To perform their functions effectively,

independent fiscal institutions must have ad-

equate resources, both in terms of human

expertise and access to information.

There are significant disparities across Europe in

the size of teams and the resources allocated to

them.

Countries that have assigned the IFI a broad

forecasting mandate generally allocate large teams

and resources to them. The Dutch CPB, for exam-

ple, employs over 130 analysts and economists,

whose responsibility go beyond macroeconomic

and public finance forecasting. Similarly, the Bel-

gian Federal Planning Bureau, which has a broad

remit, employs around 100 staff with multidiscipli-

nary expertise, the Spanish AIReF has almost 70 ex-

perts, and the British OBR has around 50 public fi-

nance specialists. On the other hand, in smaller

states or where the scope of the IFI is restricted,

staff numbers can be very small (around 5 to 15

people). For example, the Maltese Fiscal Council or

the Latvian Budget Committee operate with only a

handful of economists. This variation size partly de-

termines the methodological approcahes used: a

small IFI will favour comparative analysis, as it may

lack the capacity to model all revenue components

in detail.

The Two Pack provides for "appropriate access to infor-

mation in order to carry out their duties". Similarly, the di-

rective on the budgetary framework 2024/1265 provides for

"extensive and timely access to necessary information".

Access to detailed data and government models is

essential for IFIs.

European regulations

require

that the IFI be granted access to all relevant gov-

ernment information. In practice, memoranda of

understanding (MoUs) are signed to facilitate in-

formation sharing (timetable for sending draft

forecasts, transmission of tax micro-data, etc.).

Nevertheless, difficulties sometimes remain. The

AIReF, for example, has pointed out that the

budget documents sent by certain regions were in-

complete, forcing it to make its own assumptions

due to the lack of comprehensive information on

new measures. Similarly, the Portuguese CFP has

privileged access to administrative data from the

Bank of Portugal and the National Statistics Insti-

tute, but lacks access to data from the tax authori-

ties. Thanks to this access, its small technical team

- six people for macroeconomic, revenue and pub-

lic finance forecasting - specialised in public finance

and economic modelling, is able to produce inde-

pendent forecasts on a modest budget (under one

million euros).

Adequate financial resources are crucial to ensur-

ing the independence of IFIs.

Many have their own

budget, which is often minimal compared to over-

all public spending. When the IFI is attached to an-

other institution (Court of Auditors, Central Bank),

it benefits from the latter's logistical resources, but

may lack transparency or autonomy regarding

their own dedicated resources.

International organisations such as the OECD rec-

ommend ensuring that IFIs receive stable and suf-

ficient funding, in order to strengthen their inde-

pendence and limit the risks inherent in political

uncertainties

. European law (Council Directive

(EU) 2024/1265 of 29 April 2024 on national budg-

etary frameworks

) requires Member States to

guarantee IFIs sufficient and stable resources to

carry out their mandate without interruption, and

to have timely access to relevant information.

1.5. The reform of the Stability Pact alters

the role of independent fiscal institutions

Several independent fiscal institutions play an

post

role in assessing outcomes and verifying com-

pliance with fiscal commitments. This monitoring

European Fiscal Board,

Annual Report

, 2024

Member States shall have until 31 December 2025 to bring

into force the laws, regulations and administrative provisions

necessary to comply with this Directive.

Public revenue forecasting: who does what in Europe?

work focuses in particular on the differences be-

tween the forecasts and the revenue actually col-

lected, helping to identify the sources of forecast-

ing errors. The OBR, for example, publishes an an-

nual report examining in detail why actual tax re-

ceipts may have differed from its initial projections,

enabling model recalibration where needed and

improving predictive accuracy.

Eurozone IFIs are also responsible for ensuring co-

herence between national budgetary frameworks

and compliance with EU and domestic fiscal rules.

Under the previous version of the Pact, they were

required to verify annually whether the structural

balance aligned with stated targets and indicate

whether the circumstances leading to the trigger-

ing of corrective mechanisms were in place. This

framework continues to be the basis for most na-

tional fiscal rules. In Belgium, the High Council of

Finance issues an

ex ante

opinion in the spring on

the balance targets to be included in the Stability

Programme, followed by a report in the summer on

budget execution, feeding into discussions on po-

tential trajectory adjustments. In France, the HCFP

intervenes by issuing its opinions on the draft pro-

gramming and finance bills and the bill on the set-

tlement and approval of annual accounts. It as-

sesses whether the cumulative deviation of the

structural balance from the multi-year programme

exceeds 0.5% of potential GDP and, if so, formally

declares the existence of a "significant deviation".

This may lead to corrective measures in subse-

quent fiscal legislation or, as in 2014, to a down-

ward revision of the multiannual targets.

The April 2024 reform of the Stability and Growth

Pact (SGP) replaced the annual rolling Stability Pro-

grammes with fixed medium-term budgetary and

structural plans based on a net primary expendi-

ture trajectory, rather than a structural balance

rule. The revised SGP does not require IFIs to re-

view the annual monitoring reports associated

with the Medium-Term Structural Plan (MTSP).

Still, Member States may ask an IFI to assess com-

pliance with the net expenditure path established

by the Council under the new preventive arm of

the Pact and, if necessary, to identify the drivers

behind any deviations. The new regulation on the

preventive arm specifies, however, that such inde-

pendent assessments are non-binding and serve

Jonung, L., and M. Larch. 2006. "Improving Fiscal Policy in

the EU: the Case for Independent Forecasts." Economic Policy

21 (47): 492-534.

only to complement the work of the European

Commission.

With regard to forecasts, Member States may re-

quest the opinion of their national IFI on the mac-

roeconomic assumptions and forecasts underpin-

ning the trajectory (and the accompanying reform

plan). This option will become mandatory as of

May 2032, provided that the IFI has developed suf-

ficient analytical capacity to perform this task. With

regard to the excessive deficit procedure (EDP), the

new directive on national budgetary frameworks

suggests

that IFIs provide analyses to support po-

tential revisions of Council recommendations on

the correction of an excessive deficit. These new

provisions imply changes to the mandates of the

IFIs, which in France, as in most other Member

States, have yet to be implemented, although re-

forms are already underway in several countries.

2. The effectiveness of IFIs in strengthening

the credibility of fiscal policy depends on

their actual role

2.1. Strengthening the independence of

forecasts tends to reduce the optimistic bias

of official forecasts and improve their accu-

racy

The introduction of IFIs with a mandate for mac-

roeconomic and/or fiscal forecasting is still too re-

cent to make a definitive assessment of their im-

pact on the quality of forecasts

. The limited size of

the samples and the difficulty of establishing causal

links mean that existing studies should be inter-

preted with great caution.

Despite these limitations, the economic literature

does highlight some noteworthy trends.

First of all, it notes

the presence of an optimistic

bias in government public finance forecasts over

long periods

. Jonung and Larch (2006)

empirically

quantify the optimistic bias in structural deficit

forecasts over the period 1987-2003 in France,

Germany, the UK and Italy. Using a theoretical

model, they also attribute the causes of this bias

essentially, on the revenue side, to the optimism of

the growth forecast and, on the expenditure side,

CPO Note n

11, March 2025

to the inertia of budget execution. To reduce the

bias in public finance forecasts, the authors recom-

mend entrusting an independent authority with

the task of producing impartial projections of

growth and other variables crucial to public finance

forecasting.

In a comprehensive panel analysis of 39 IFIs around

the world, Beetsma et

(2019) suggest that

coun-

tries with IFIs are able to reduce the optimistic

bias in fiscal forecasts

, which is more pronounced

for countries with fiscal rules

1819

. However, the

econometric estimate of the effect on the forecast-

ing bias is imprecise. On the other hand,

the pres-

ence of an IFI is associated with a significant im-

provement in forecast accuracy

: errors are smaller

on average. It should be noted that this study fo-

cuses on budget balance forecasts and therefore

does not distinguish between revenue and ex-

penditure. Another conclusion of this study is that

the forecast bias emerges mainly from the budget

projections themselves and not from the macroe-

conomic framework. However, this is only an aver-

age trend in a heterogeneous panel, which must

therefore be qualified on a case-by-case basis.

At national level, a recent report by the Italian UPB

shows that the bias in the macroeconomic fore-

casts underlying the budget has been greatly re-

duced following the introduction of the

Ufficio

France, the various studies carried out by the In-

spectorate General of Finance (IGF)

, the perma-

nent secretariat

of the HCFP

and the Court of

Audit

have concluded that there has been no sig-

nificant bias in revenue forecasts over the last ten

or twenty years.

Roel Beetsma, Xavier Debrun, Xiangming Fang, Young Kim,

Victor Lledo, Samba Mbaye and Xiaoxiao Zhang (2019), "Inde-

pendent fiscal councils: recent trends and performance,"

Eu-

ropean Journal of Political Economy

, 57, pp. 53-69. Economet-

ric results are based on a sub-sample of EU Member States.

The optimistic bias observed in countries subject to budget-

ary rules has been widely theorised and well documented in

the empirical literature. It reflects the desire to avoid the bind-

ing effect of the rule by giving the illusion that it can be com-

plied with without a politically delicate trade-off between

lower spending and higher taxes. See in particular Jeffrey

Frankel and Jesse Schreger (2013), "Over-optimistic official

forecasts and fiscal rules in the eurozone,"

Review of World

Economics

, 149, pp. 247-272.

Ufficio Parlamentare di Bilancio,

Budgetary Policy Report

June 2024.

However, the HCFP's permanent secretariat has

identified an optimistic bias in French growth fore-

casts over the period 2004-2023, which has been

reduced since its creation in 2014.

The independence of the forecasting process can-

not, of course, change the fact that

some forecast

errors, occasionally considerable, remain una-

voidable

. For example, in the case of the UK OBR,

Atkins and Lanski (2023) show that there remains

an optimistic bias in real growth and deficit fore-

casts after the introduction of the

Office

in 2010.

However, the optimism regarding the deficit is due

to a systematic underestimation of public spending

rather than revenue (where the forecasting exer-

cise primarily reflects expert work).

Although this

study shows that the official macroeconomic fore-

casts prepared by the OBR are not uniformly better

than those of other forecasters, they are less bi-

ased and more accurate than those made by the

UK Treasury before the creation of the

Office

To sum up, the empirical analyses indicate that the

mere presence of an IFI is generally associated with

a reduction in the optimistic bias often present in

the official forecasts of countries subject to fiscal

rules. The accuracy of official forecasts is also

greater in the presence of an IFI.

The added value of an IFI in the forecasting process

has much less to do with the presumption of

greater technical quality than with the perception

of a lower risk of political interference.

This

strengthens the credibility of budget commit-

ments.

Inspection générale des finances, "

Les prévisions de recettes

des prélèvements obligatoires

Report No. 2024-M-028-04

July 2024.

It is headed by a general rapporteur, assisted by a deputy

general rapporteur and five rapporteurs.

Eric Dubois and Guillaume Gilquin, "

Les prévisions macroé-

conomiques et de finances publiques du Gouvernement et leur

réalisation

Study Note No. 2024- 2

, Permanent Secretariat of

the HCFP, September 2024.

Cour des Comptes, "

La prévision des recettes fiscales de

l'État entre 2014 et 2023

", December 2024.

Opinion No. HCFP-2025-2 on the draft law on the results of

the management and approval of the accounts for the year

2024.

Graham Atkins and Luke Lanskey (2023), "The OBR's fore-

cast performance,"

OBR Working Paper

N°19.

Public revenue forecasting: who does what in Europe?

2.2. In the three countries (Austria, Belgium,

the Netherlands) where an independent in-

stitution is responsible for macroeconomic

forecasting, revisions to revenue forecasts

resulting from changes in growth projections

tend to be more limited in scale.

Tax revenues forecasting generally relies on a dis-

aggregated approach, whereby each tax is mod-

eled individually based on its specific characteris-

tics. In France, the methodologies employed by the

French Treasury have been detailed in a recent

publication.

Broadly speaking, tax forecasting methods can be

grouped into three main categories, all based on

the assumption that each tax evolves from one

year to the next due to the combined effect of new

discretionary measures and spontaneous growth,

under a constant legislative framework.

The first

category

involves projecting the underlying trend,

adjusted for discretionary measures. This approach

requires long historical time series of the new

measures and relies on the strong assumption that

the non-discretionary component will continue to

grow at the constant rate.

The second category

uses elasticities with respect to macroeconomic

variables to model the relationship between tax

revenues and their underlying macroeconomic

drivers.

The third category

applies to tax types that

are not directly influenced by macroeconomic de-

velopments and that do not follow a stable or pred-

icable trend

. It therefore relies on

ad hoc

esti-

mates, based on research findings or expert judg-

ment.

Finally, in the absence of more robust

methods, the forecasting of minor taxes is some-

times based on simply carrying forward the previ-

ous year's figures

, under the assumption that the

most reliable estimate of future revenues is the

level observed the year before

Macroeconomic forecasts thus play an essential

role in analyzing the dynamics of compulsory tax-

Direction générale du trésor, "

How are public finance fore-

casts produced and what are the uncertainties surrounding

them

", March 2025

For example, revenue from a recently introduced tax.

The random walk assumption is mainly used for low yield

taxes where the sign of the past trend is not robust enough to

determine a trend for the forecast.

Other macroeconomic variables also help to explain the

spontaneous growth in compulsory deductions, such as the

ation,

when the second category of revenue fore-

casting methods is applied. Changes in taxes and

social security revenues are broken down into two

components: one discretionary, the other sponta-

neous. Spontaneous growth in tax and social secu-

rity revenues is empirically correlated with GDP

growth

. It can be expressed as a function of the

elasticity of tax and social security revenues to GDP

- that is the percentage increase in revenues asso-

ciated with a 1% rise in GDP, assuming unchanged

legislation, and actual rate of GDP growth (

see

An-

nex II).

Revenue forecasting is subject to inherent uncer-

tainties, making forecast revisions unavoidable

due to various factors such as unexpected events

or sudden changes in households and business be-

havior. The magnitude of these revisions can serve

as an indicator of the robustness and quality of the

forecasts.

The statistical analysis that follows seeks to evalu-

ate the scale of revenue forecast revisions, de-

pending on the mandates of independent fiscal in-

stitutions, using a panel of eight European coun-

tries

. Revenue forecast revision are defined as

the difference between the revenue projections

submitted in October of the previous year in the

draft budget plans sent to the European Commis-

sion and the updated forecasts produced one year

later. The aim here is not to compare the forecasts

with actual outcomes (as published, for example,

in France

’s national accounts by INSEE

), but rather

to assess the extent of revisions in the forecasts

themselves over a one year horizon. To quantify

these deviations, the analysis relies on the root

mean square

of forecast revisions.

The study covers the period 2013-2023. The year

2013 marks the entry into force of the Treaty on

Stability, Coordination and Governance (TSCG),

which required each Member State to establish an

independent institution responsible for monitoring

compliance with fiscal rules. It also corresponds to

growth in the share of private sector wages (see Haut Conseil

des Finances Publiques, L'élasticité des prélèvements obliga-

toires au PIB : définition, interprétation et limites, Note

méthodologique n°2023-01, February 2023).

In addition to France (FR), the benchmarking group includes

Germany (DE), Austria (AT), Belgium (BE), Italy (IT), Spain (SP),

Portugal (PT) and the Netherlands (NL).

The root mean square of forecast revisions is the square

root of the arithmetic mean of the squared forecast revisions

over the period.

CPO Note n

11, March 2025

the implementation of the correction mechanism

in cases of non-compliance.

Revisions to revenue forecasts are broken down

into several components, as detailed in Annex II:

the accuracy of macroeconomic fore-

casts for the upcoming year (real

growth effect and deflator effect),

ii)

revisions to forecasts for previous

years (base effect), sometimes result-

ing from methodological changes in-

troduced by national statistical insti-

tutes,

iii)

the reliability of forecasts of discre-

tionary

measures

(effect

new

measures, noted MN),

iv)

analysis of the sensitivity of revenue

growth to GDP growth (elasticity ef-

fect), including the quality of forecast-

ing models.

The study is based on descriptive statistics and

does not constitute an econometric analysis. It

does not aim to establish a causal relationship be-

tween the extent of the forecast revision and the

presence or absence of an IFI.

The analysis shows an increase in revenue forecast

revisions across all countries in the panel since the

Covid-19 pandemic, reflecting a general increase in

economic uncertainty. Notably, the impact of revi-

sions to nominal GDP growth on revenue forecasts

revisions has doubled, increasing from 0.3% of GDP

over the 2014-2019 period to 0.7% of GDP over the

2021-2023 period. Similarly, the effect of revisions

related to new measures has doubled (from 0.2%

of GDP to 0.5% of GDP), while the impact of elas-

ticity revisions has tripled, rising from 0.5% of GDP

to 1.4% of GDP).

Graph 1: Average magnitude of revenue forecast

revisions attributable to nominal growth, new

measures (NM) and elasticity across the panel

countries

Source : CPO

Scope: eight European countries

Note: root mean square of revisions, in GDP points

over the periods 2014-2019 "before covid" and

2021-2023 "after covid".

The statistical study also shows that in the three

countries where an independent institution pro-

duces the official macroeconomic forecast (Aus-

tria, Belgium, and the Netherlands), which is fully

adopted by the government, the average revision

of revenue forecasts due to a change in real growth

is smaller compared to countries where the inde-

pendent fiscal institutions do not perform this role

(

see

Graph 2). In countries where the IFI provides a

macroeconomic forecast that is not adopted by the

government, or does not produce such forecast at

all, the share of the revenue forecast revisions at-

tributable to revisions in real growth is not only

larger on average but also more variable (

see

An-

nex III). This finding remains robust even when in-

cluding the year 2020 in the analysis period.

0,3%

0,7%

0,2%

0,5%

1,4%

0,0%

0,2%

0,4%

0,6%

0,8%

1,0%

1,2%

1,4%

1,6%

before

covid

growth

after

covid

growth

before

covid

after

covid

before

covid

elasticity

after

covid

elasticity

Public revenue forecasting: who does what in Europe?

Graph 2: Effect of real growth revisions on reve-

nue forecast revisions based on the mandates of

the independent fiscal institutions

Source : CPO

Scope: eight European countries

Note: root mean square of revisions, in GDP points.

The "period with Covid" includes the year 2020, the

"period without Covid" covers the years 2014 to

2019 and 2021 to 2023.

However, in countries where an independent insti-

tution produces the official macroeconomic fore-

cast, the overall magnitude of revenue forecast re-

visions is, on average, no smaller than in countries

where the government prepares the official reve-

nue forecast. This is mainly due to the extent of re-

visions to the costing of new measures, for which

independent fiscal institutions often lack sufficient

information at the time of their forecasting exer-

cises. It is also linked to revisions in elasticities, es-

pecially after the Covid-19 pandemic, when house-

holds and business behavior changed significantly.

In the only country in the sample where an inde-

pendent institution prepares both the official mac-

roeconomic forecast and a public finance forecast,

on a no-policy-change basis and with an assess-

ment of the effects of the government's discretion-

ary measures (Austria), the overall extent of reve-

nue forecast revisions is lower than the average

observed in other countries where the mandate of

the independent fiscal institutions is more limited.

However, this last result finding should be inter-

preted with caution, given the small number of Eu-

ropean countries included in the sample and the

fact that this institutional arrangement exists in

only one of them.

3. European best practices among inde-

pendent fiscal institutions suggest possible

developments for the HCFP.

To enhance the credibility of the budget, the

HCFP’s role in the governance of revenue forecast-

ing could evolve. Practices observed elsewhere in

the EU suggest

four complementary avenues for

reform

The aim is to strengthen th

e High Council’s opera-

tional independence and improve the transpar-

ency of budget forecasts. Some of these avenues

may lead to an adjustment of the organic frame-

work of the HCFP, which is in any case necessary to

bring it in line with the new European framework

for public finances. While it goes without saying

that there are interdependencies between these

avenues, this note does not endorse a specific

combination of reforms but sketches out a pano-

rama of possible areas for improvement that may

serve to inform the Government and Parliament,

drawing on European best practices.

The first area for improvement concerns access to

information

—

its level of detail, timing of trans-

mission and the time given to the HCFP to carry

out its analysis.

In several countries (Austria, Bel-

gium, Italy), the law requires the systematic trans-

mission, in electronic form, of databases and mod-

elling codes as soon as they are available, with a

notice period that can last several months before

the budget is presented. To allow for thorough

analysis of the forecasts - a good and consistent

practice observed in all IFIs - one option would be

to ask the Government to either publish or trans-

mit to the HCFP the data for the summer and win-

ter "economic budgets" (macroeconomic assump-

tions, modelling parameters, etc.). It does, how-

ever, mean that the Ministry must inform the HCFP

in advance of the process. In any case, the current

deadlines (one week) are insufficient to allow the

HCFP to give its opinion. The "no-policy-change"

baseline projections prepared by the administra-

tion could also be systematically transmitted, ide-

ally on an ongoing basis, including detailed infor-

mation on the forecasting methodology. The usual

precautions relating to data confidentiality - as in

the case of the secure protocol used by the UK’s

OBR - would naturally apply.

1,39%

0,28%

1,85%

0,33%

1,87%

0,34%

0,00%

0,20%

0,40%

0,60%

0,80%

1,00%

1,20%

1,40%

1,60%

1,80%

2,00%

period with Covid

non-Covid period

the macroeconomic forecast is produced by an

independent institute

the IBI produces an independent forecast that is not

taken up by the government

IBI does not produce macroeconomic forecasts

CPO Note n

11, March 2025

A second area concerns the HCFP's technical capa-

bilities and analytical skills.

Possessing in-house

forecasting capabilities strengthens the credibility

of the opinions that independent fiscal institutions

are called upon to issue. The examples of

the Office

for Budget Responsibility

in the United Kingdom

and the Federal Planning Bureau in Belgium show

that a team of between fifteen and thirty econo-

mists can produce comprehensive macroeconomic

forecasts and, where appropriate, revenue projec-

tions based on unchanged legislation. At the other

end of the spectrum, some IFIs focus solely on com-

parative simulations using micro-models. The

range of technical capabilities can thus vary, from

basic macroeconomic forecasts covering key ag-

gregates (growth, inflation, employment) to the

production of all the official forecasts used to draw

up the budget, including the estimated impact of

new measures.

Expanding the HCFP’s forecasting capacity would

require secure access to administrative databases

(see above). At the same time, it is important to en-

sure that an increased role for the IFI in official

forecasting does not reduce the administration's

ability to capture and mobilise the new infor-

mation needed to reflect the best state of macroe-

conomic and accounting information to date, or

risk making the budget process overly burden-

some. Open and continuous communication be-

tween the teams of the Ministry of Finance and

those of the HCFP would be essential to the success

of any such reform.

The third area of development relates to the

HCFP's influence on forecasts

At the very least,

independent fiscal institution issues an opinion on

the official forecasts for a given date. It is then nec-

essary to rely exclusively on the reputation and in-

stitutional stature of the IFI in the public debate in

order to hope that its opinion will be taken into ac-

count. Several countries including Italy (UPB), the

Netherlands (CPB) and Spain (AIReF) - apply a

stricter version of the 'comply or explain' principle:

any substantial divergence must be justified within

the budget documents and discussed in Parlia-

ment. Requiring the government to justify any de-

viations from the IFI's opinion enhances the visibil-

ity of the IFI's analyses and is intended to encour-

age greater justification of government choices,

without imposing formal constraints. In the case of

Even if it does not carry out the quantification of new

measures itself, an extended role for the IBI in revenue fore-

casting would put it in an ideal position to assess medium-term

the HCFP, the application of this principle could be

further formalised. For example, the government

would be required to explain precisely, in the

budget documents, its reasons for any deviation

from the High Council’s opinion

, in order to in-

crease transparency and limit unjustified devia-

tions. Following the example of Portuguese prac-

tice (CFP), this obligation could be alongside ex

post monitoring mechanisms.

A more ambitious option would be to require the

Government to base its forecasts on those pro-

duced by the IFI when drawing up the budget, as is

done in the United Kingdom. Here again, there is a

gradation between the use of macroeconomic

forecasts only and the outright adoption of all

budget forecasts prepared by the IFI. As a general

rule, governments remain responsible for revenue

and expenditure projections.

The fourth area of development concerns the

HCFP's freedom of action.

In principle, an IFI may

be bound by a limited set of specific tasks enclosed

within a strict timetable for communication to the

general public. While this approach protects the in-

stitution from any suspicion of pursuing its own po-

litical agenda by strategically choosing its interven-

tions in the public debate, it also limits the institu-

tion’s responsiveness and early warning capacity

The opposite option is to give the IFI complete free-

dom to define its own work programme inde-

pendently (over and above the legal obligations

arising directly from its mandate) and the timing of

its interventions. The Spanish AIReF, for example,

has the power of self-referral, enabling it to publish

"alert notices" at any time, particularly when a slip-

page is looming. In the area of forecasting, the ex-

plicit introduction of a power of self-referral ena-

bles the IFI to address any issue relating to macro-

economic or budgetary assumptions at any stage in

the budget cycle, without waiting for a formal re-

ferral from the Government or Parliament. In the

specific case of the HCFP, the power of self-referral

would, for example, give it the capacity to issue

warnings outside the formal calendar for reviewing

draft budget bills. In this way, the High Council

could make a useful contribution to informing the

recently established Alert Committee, which brings

together parliamentarians from the relevant com-

fiscal sustainability and to carry out the annual monitoring of

the MTSP provided for in the new European framework under

the best possible conditions from 2032 onwards.

Public revenue forecasting: who does what in Europe?

mittees and the ministers of finance and public ac-

counts, and which is called upon to examine the

risks of deviations from public revenue and ex-

penditure forecasts three times a year.

Ultimately,

each of these best practices areas - im-

proving access to information, developing internal

forecasting capabilities, strengthening the "

comply

or explain

" principle, extending the HCFP's warning

capabilities is grounded in successful European ex-

periences. The precise size of the changes that the

HCFP could undergo will depend on a political de-

cision that balances available resources, the need

for responsiveness, and the imperative of en-

hanced credibility.

CPO Note n

11, March 2025

Main findings and guidelines

This note examines the role of independent fiscal institutions (IFIs) in public revenue forecasting in Europe, an

area where the credibility of financial commitments determines a State's ability to protect its economy. Draw-

ing on a broad overview of national practices and a review of the literature, the authors begin by recalling

that, since the TSCG (2012) and Regulation 473/2013, each eurozone country must base its budget on fore-

casts endorsed by at least one IFI. Three models coexist among the nine countries examined in the note: insti-

tutions that produce the official forecasts

themselves

(Austria, Belgium, Netherlands, United Kingdom), those

that formally validate them (Spain, Italy) and those, such as the German

Beirat des Stabilitätsrats

, the French

HCFP or the Portuguese CFP, that limit themselves to a critical assessment that does not oblige the govern-

ment to alter its forecasts. This diversity is due to the legal framework (constitution or fundamental law, or-

ganic law or simple decree), the degree of independence guaranteed, the number of staff available (from a

few economists to over a hundred) and effective access to information.

The statistical analysis conducted on a sample of eight European countries between 2013 and 2023 shows

that, although the heightened uncertainty following Covid-19 led to a sharp increase in the scale of forecast

revisions, in the three countries where the IFI produces the macroeconomic forecast used by the government

in its budgetary documents, the impact of growth forecasts revisions on revenues is more modest and less

dispersed. However, the overall quality of revenue forecasts still depends on other factors, in particular the

accuracy of the costing of new measures and the ability to adjust tax elasticities swiftly in response to changes

in economic behaviour.

It is in this context that the review of the mandates of the national IFIs, made necessary by the April 2024

reform of the Stability Pact, will have to take place.

In order for this review to contribute to strengthening the credibility of public revenue forecasts, the CPO

identifies four possible complementary avenues for change in the practices of eight other European countries,

which deserve to be put forward for public debate:

improve access to information,

develop the Haut Conseil's in-house technical capabilities,

strengthen the scope of its opinions,

increase its freedom of action.

Public revenue forecasting: who does what in Europe?

Annex I - Comparative table of the role of several independent fiscal institutions in macroeconomic and fiscal forecasting

Country

Institution

(IFI)

Forecasting man-

date (macroeco-

nomic and/or fis-

cal)

Degree

independ-

ence (legal status)

Time of intervention in

the budgetary procedure

Revenue forecasting methods

Resources (staff and budget)

Austria (AT)

Fiskalrat

(Budget

Council)

and

WIFO

(Aus-

trian Institute

for Economic

Research)

WIFO:

produces

the independent

macroeconomic

forecasts

(growth, employ-

ment)

used

the government;

Fiskalrat:

pro-

duces

its

own

budget

forecast

(revenue,

ex-

penditure) to as-

sess the budget.

WIFO: founded in 1927 -

independent

research

institute (private not-

for-profit,

state-subsi-

dised); Fiskalrat: estab-

lished by law (2013) - in-

dependent body affili-

ated

the

Central

Bank, consisting of 15

members and a secre-

tariat

Ex ante: in the spring,

Fiskalrat produces a flash

forecast published before

the Stability Programme;

in the autumn, a new 4-

week forecast incorpo-

rating the measures in

the draft budget; Ex post:

compliance reports and

recommendations.

WIFO: national macroeconomic

model with quarterly projections;

Fiskalrat:

revenue

forecasting

model covering around 50 cate-

gories

(taxes,

contributions),

comparison

with

government

forecasts

WIFO: around 25 dedicated econ-

omists (130 employees in total);

Fiskalrat: secretariat of around 7

experts; budget financed by the

Central Bank and the Ministry of

Finance

Belgium (BE)

Federal Plan-

ning

Bureau

(FPB)

and

High

Council

Finance

(HCF)

FPB: produces of-

ficial

macroeco-

nomic

forecasts

twice a year and

autonomous

revenue forecast

on a no-policy-

change basis. The

government also

produces its own

revenue forecast,

which

com-

pared with that

of the FPB in the

event of signifi-

cant

discrepan-

cies. CSF: ex ante

opinion

budget

targets

BFP: established by law

(1945, reorg. 1959), in-

dependent body of pub-

lic interest under the su-

pervision of the Prime

Minister and the Minis-

ter for the Economy;

CSF:

established

Royal Decree (1989), in-

dependent

advisory

committee

operation-

ally supported by the

National Bank due to its

limited resources.

Ex ante: twice a year

(economic budgets), the

FPB provides macro fore-

casts and a revenue fore-

cast

no-policy-

change basis; the FSB is-

sues an opinion on the

public

balance

targets.

During: the FSB publishes

a report in the summer

on the implementation of

the current budget. Ex

post: the FSB assesses the

annual budget execution

and, if necessary, triggers

corrective mechanisms.

FPB: macroeconometric model

(HERMES model) for macroeco-

nomic forecasts and autonomous

revenue forecasts on a no-policy-

change basis, compared with gov-

ernment forecasts in the event of

significant

discrepancies.

FSB:

critical analysis based on FPB and

National Bank data.

FPB: around 100 staff, including

around thirty specifically dedi-

cated

macroeconomic

and

budgetary forecasting. FSB: very

limited human resources (1.5 full-

time equivalents), relying mainly

on the National Bank for its anal-

yses. The FPB's budget is financed

by the federal government.

CPO Note n

11, March 2025

and ex post opin-

ion on budget ex-

ecution, with the

possibility of trig-

gering corrective

mechanisms.

Germany

(DE)

Stabilitätsrat

(Stability

Council)

and

Unabhäng-

iger

Beirat

(Independent

Advisory

Committee)

It does not pro-

duce

macroeco-

nomic or revenue

forecasts directly,

but monitors the

sustainability

public

finances

and

compliance

with

budgetary

rules (debt brake,

European rules).

Enshrined

Article

109a of the Basic Law

(Grundgesetz), the Sta-

bility Council brings to-

gether the Federation

(Bund) and the Länder.

Its advisory committee

is regarded as Germa-

ny's independent fiscal

institution (IFI).

Meets regularly to moni-

tor the federal and Län-

der budgets in order to

detect

any

imbalances

and recommend correc-

tive measures; also moni-

tors the debt path in rela-

tion

the

European

framework.

Macroeconomic

forecasts

are

provided by the Joint Economic

Forecast (five independent re-

search institutes) and validated

by the Ministry of the Economy;

tax revenue forecasts are drawn

up by a working group chaired by

the Ministry of Finance.

The independent committee is

made up of experts (Bundesbank,

Sachverständigenrat, etc.); it has

no budget of its own and relies on

resources coordinated between

the Bund, Länder and member

bodies.

Spain (ES)

Autoridad In-

dependiente

de Responsa-

bilidad Fiscal

(AIReF)

Endorses

na-

tional

and

re-

gional macroeco-

nomic forecasts,

produces

inde-

pendent

short,

medium

and

long-term public

revenue

projec-

tions

assess

budgets

Created by organic law

(2013)

independent

administrative

author-

ity,

9-member

board

with binding power of

recommendation (com-

ply

explain

month)

Ex ante: validation of the

macro scenario of each

draft budget (State and

17 regions); During: re-

port at the end of the

project; Ex post: infra-an-

nual

monitoring

and

warning notices in the

event of drift.

Sophisticated internal modelling:

macroeconomic models for each

level, projections of the main tax

and social security revenues, no-

policy-change techniques, com-

parison with the Bank of Spain,

the European Commission, etc.

Approximately 70 experts (econo-

mists, statisticians) divided into

macro and budgetary divisions;

annual budget of around €6 mil-

lion (State grant) with manage-

ment autonomy

France (FR)

High

Council

for Public Fi-

nance (HCFP)

Formulates

opinion on the re-

alism of the mac-

roeconomic sce-

nario

forecasts,

and the revenue

and expenditure

forecasts in the fi-

nancial texts of

the Finance Bill,

Created by organic law

(2012)

independent

body, attached to the

Cour

des

Comptes,

membership

mixed

(magistrates,

experts

appointed

Parlia-

ment)

Ex ante: mandatory opin-

ion on the macro-eco-

nomic framework of the

Finance Bills and the Sta-

bility Programme (before

submission

Parlia-

ment); Ex post: opinion

on the Settlement Acts, if

the

difference

the

Comparative analysis of certain

variables and counter-analysis of

macroeconomic and public fi-

nance forecasts (certain compul-

sory levies with unchanged poli-

cies, in particular by estimating

tax bases using econometric mod-

els or an accounting approach, ex-

penditure and the recovery plan)

Small permanent secretariat (a

few people made available by the

Court of Auditors); budget inte-

grated into that of the Court

Public revenue forecasting: who does what in Europe?

and

the

con-

sistency of public

finance forecasts

between

finan-

cial

texts

and

with France's Eu-

ropean

commit-

ments

structural balance is sig-

nificant within the mean-

ing of the Organic Law.

Italy (IT)

Parliamen-

tary

Balance

Sheet

Office

(UPB)

Endorses the gov-

ernment's

mac-

roeconomic fore-

casts

and

as-

sesses

the

PBO/DEF's

budget forecasts

(revenue,

ex-

penditure)

Created

constitu-

tional law (2012) - inde-

pendent authority at-

tached to Parliament,

college of 3 members

appointed

Parlia-

ment, right of access to

all public data

Ex ante: validation of the

macro framework of the

Economic and Financial

Paper (spring) and its up-

date (autumn); opinion

on the Finance Bill when

it is tabled (analysis of

measures); Ex post: an-

nual evaluation report.

Internal

econometric

models

(New Keynesian model), compari-

son with a panel of other private

and public forecasts, micro-simu-

lation

Approximately 30 analysts (public

finance economists); budget fi-

nanced by Parliament

Netherlands

(NL)

Centraal

Planbureau

(CPB)

Produces

the

macroeconomic

framework

un-

derlying

the

budget forecasts;

incorporates the

macroeconomic

impact

tax

measures,

with-

out

systemati-

cally

assessing

the public finance

trajectory

Created in 1946, inde-

pendent

institute

public interest; benefits

from a tradition of au-

tonomy not codified by

a specific organic law

Publication of the Central

Economic

Plan

the

spring (before the stabil-

ity programme) and a

macro-forecast in the au-

tumn (on the day of the

budget); no formal coun-

ter-assessment

during

the budgetary review.

Macroeconomic and accounting

models, integration of the effects

of tax measures; also carries out

one-off studies on the redistribu-

tive impact of targeted policies

Around 130 experts (including 100

economists and analysts); dedi-

cated budget, rooted in the tradi-

tion of scientific independence

Portugal (PT)

Conselho das

Finanças Pú-

blicas (CFP)

Produces its own

revenue

fore-

casts on a no-pol-

icy-change basis,

but for only 8

taxes; also criti-

cally

evaluates

the government's

official forecasts

Created by law (2011)

and operational since

2012 - an independent

institution

associated

with the Assembly, the

council is made up of a

chairman

and

four

members appointed for

Ex ante

: detailed opinion

on the credibility of mac-

roeconomic

and

fiscal

forecasts before the draft

budget is presented to

Parliament.

Biannual

publication of macroeco-

nomic and fiscal forecasts

over a five-year horizon.

Critical and comparative analysis,

supplemented by internal reve-

nue projections on a no-policy-

change basis. Verification of the

government's

assumptions

against its own forecasts and

those of third-party institutions

(Bank of Portugal, European Com-

mission, IMF).

Technical team made up of ex-

perts specialising in public finance

and economic modelling (6 peo-

ple in total). Modest budget (less

than €1 million), financed from

public funds. Regular access to

data from national public admin-

istrations (except tax administra-

tion) and close cooperation with

CPO Note n

11, March 2025

(macro and fis-

cal).

seven-year,

non-re-

newable term, except

for the non-executive

members whose term

may be renewed once,

guaranteeing neutrality.

Ex post

: full assessment

of annual budget imple-

mentation.

the Bank of Portugal, the National

Statistics Institute (INE) and Euro-

pean institutions.

United King-

dom (UK)

Office

for

Budget

Re-

sponsibility

(OBR)

Prepares all offi-

cial

macroeco-

nomic and budg-

etary

forecasts

(revenue,

ex-

penditure,

bal-

ance) for the gov-

ernment

Created by law (BRNA

Act 2011) - independent

State body, attached to

the Treasury, with no

functional

subordina-

tion

Ex ante: two annual fore-

casts (Budget and Au-

tumn

Statement);

post: annual forecast var-

iance assessment report

Own econometric models (macro

and fiscal), collaboration with

HMRC

for

micro-simulations,

methodological transparency

Approximately 50 permanent ex-

perts; annual budget of around £3

million (public funding secured)

Public revenue forecasting: who does what in Europe?

Annex II - Methodology for comparing the determinants of revenue forecast revisions

Every year in October, the governments of the European Union submit to the European Commission a draft budget plan setting out their revenue forecasts for the

current year and the following year. The forecast of public revenue is presented for the first time in the previous year (in October t-1) and for the second time

during implementation (in October t). On the basis of these two versions of the same forecast

, the first aim of the analysis is to characterise the extent of the

forecast revision between countries by relating to GDP the difference in the level of compulsory levies between the two forecast exercises:

(??

𝑡

−

𝑡

)/?𝐼𝐵

𝑡

with

𝑡

the level of compulsory levies for year t in the October t draft budget plan.

Next, the analysis seeks to identify the main determinants of the revision of revenue forecasts, distinguishing between the effects of revising growth and those of

revising new measures, the elasticity of compulsory levies in relation to GDP and the level of compulsory levies in the previous year. The breakdown is shown

below.

The dynamics of compulsory deductions are as follows:

𝑡

= ?? + (1 + 𝜀𝑦) ∗ ??

𝑡−1

With

𝑡

the level of compulsory levies for the year,

the new measures adopted,

𝜀

the elasticity of compulsory levies in relation to GDP,

𝑔

real growth and

𝜋

the

GDP deflator, and

𝑦

nominal growth.

It is assumed that the dynamics of compulsory levies can be approximated by the formula, assuming that nominal growth can be approximated by

𝑔+𝜋

𝑡

= ?? + (1 + 𝜀(𝑔 + 𝜋)) ∗ ??

𝑡−1

The revision of two forecasts of compulsory levies for year t can be broken down into several effects:

𝑡

− ??

𝑡

= ??

+ (1 + 𝜀

(𝑔

+𝜋

)) ∗ ??

𝑡−1

− ??

− (1 + 𝜀

(𝑔

+𝜋

)) ∗ ??

𝑡−1

1/ The impact of new revenue measures

𝑡

− ??

𝑡

= (??

− ??

) + (1 + 𝜀

(𝑔

+𝜋

)) ∗ ??

𝑡−1

− (1 + 𝜀

(𝑔

+𝜋

)) ∗ ??

𝑡−1

Effect of new measures

2/ A "base" effect linked to the revision of the level of compulsory levies in the previous year:

𝑡

− ??

𝑡

= (??

− ??

) + (1 + 𝜀

(𝑔

+𝜋

)) ∗ (??

𝑡−1

− ??

𝑡−1

) + (1 + 𝜀

(𝑔

+𝜋

)) ∗ ??

𝑡−1

− (1 + 𝜀

(𝑔

+𝜋

)) ∗ ??

𝑡−1

Effect of new measures

Base effect

3/ A GDP deflator effect

Distinguished in the notations by the exponents a and b, which correspond respectively to the forecast made in October t and October t-1.

CPO Note n

11, March 2025

𝑡

− ??

𝑡

= (??

− ??

) + (1 + 𝜀

(𝑔

+𝜋

)) ∗ (??

𝑡−1

− ??

𝑡−1

)+𝜀

(𝜋

−𝜋

) ∗ ??

𝑡−1

+ (𝜀

𝑔

−𝜀

𝑔

) ∗ ??

𝑡−1

+𝜀

𝜋

∗ ??

𝑡−1

−𝜀

𝜋

∗ ??

𝑡−1

Effect of new measures

Base effect

Deflator effect

4/ A real growth effect

𝑡

− ??

𝑡

= (??

− ??

) + (1 + 𝜀

(𝑔

+𝜋

)) ∗ (??

𝑡−1

− ??

𝑡−1

)+𝜀

(𝜋

−𝜋

) ∗ ??

𝑡−1

+𝜀

(𝑔

−𝑔

) ∗ ??

𝑡−1

Effect of new measures

Base effect

Deflator effect

real growth effect

−𝜀

𝑔

∗ ??

𝑡−1

+𝜀

𝑔

∗ ??

𝑡−1

+𝜀

𝜋

∗ ??

𝑡−1

−𝜀

𝜋

∗ ??

𝑡−1

5/ An elasticity effect

𝑡

− ??

𝑡

= (??

− ??

) + (1 + 𝜀

(𝑔

+𝜋

)) ∗ (??

𝑡−1

− ??

𝑡−1

)+𝜀

(𝜋

−𝜋

) ∗ ??

𝑡−1

+𝜀

(𝑔

−𝑔

) ∗ ??

𝑡−1

Effect of new measures

Base effect

Deflator effect

real growth effect

+(𝜀

−𝜀

)(𝑔

+𝜋

) ∗ ??

𝑡−1

Elasticity effect

Public revenue forecasting: who does what in Europe?

Annex III - Study of the dispersion of revenue forecast revisions in a panel of European countries

The empirical study of revenue forecast revisions uses the root mean square to measure the magnitude of

revisions. A complementary analysis using the standard deviation measures the dispersion of revenue forecast

revisions. The root mean square

and the standard deviation

𝜎

are calculated as follows for a given country,

with

𝑟𝑒𝑣

𝑡

the revision at date t and

𝑟𝑒𝑣

̅̅̅̅̅

the average of revisions over the period:

?? = √

𝑇

∑

𝑟𝑒𝑣

𝑡

𝑇

𝑡=1

and

𝜎= √

𝑇

∑

(𝑟𝑒𝑣

𝑡

− 𝑟𝑒𝑣

̅̅̅̅̅)

𝑇

𝑡=1

The analysis shows an increase in the variability of revenue forecasts for all the countries in the panel since

Covid-19, a sign of greater economic volatility and increased complexity in revenue estimation. In particular,

the dispersion of revenue revisions due to revisions in nominal GDP growth has increased by 50% (from 0.6

pts of GDP over the period 2014-2019 to 0.9 pts of GDP over the period 2021-2023 in root mean square), the

effect of revising new measures has doubled (from 0.2 pt of GDP to 0.4 pt of GDP) and the effect of revising

elasticity has tripled (from 0.6 pt of GDP to 1.4 pt of GDP).

Graph 3:

Dispersion of revisions to revenue forecasts attributable to nominal growth, new measures (NM) and

elasticity on average in the panel countries, measured by the standard deviation and not, as in Graph 1 in the

main body of the note, by the root mean square of revisions, in GDP points.

Source : CPO

Scope: eight European countries

Note: standard deviation of revisions, in GDP points over the periods 2014-2019 "before covid" and 2021-2023

"after covid".

The statistical study also shows that in countries where an independent institution produces the official mac-

roeconomic forecast, which is fully adopted by the government, the average deviation in forecast revisions

due to a revision in real growth

is smaller on average than in countries where independent fiscal institutions

do not perform this task.

0,6%

0,9%

0,2%

0,4%

0,6%

1,4%

0,0%

0,2%

0,4%

0,6%

0,8%

1,0%

1,2%

1,4%

1,6%

before

covid

growth

after

covid

growth

before

covid MN

after

covid MN

before

covid

elasticity

after

covid

elasticity

CPO Note n

11, March 2025

Graph 2:

Dispersion of revisions to revenue forecasts attributable to revisions to real growth according to the

mandates of the independent fiscal institutions, measured by the standard deviation

Source : CPO

Scope: eight European countries

Note: standard deviation of revisions, in GDP points. The "period with Covid" includes 2020, the "period with-

out Covid" covers 2014 to 2019 and 2021 to 2023.

However, in countries where an independent institution produces the official macroeconomic forecast, the

deviation of revenue forecast revisions is no less on average than in countries where the government produces

the official revenue forecast. This result is essentially explained by the volatility of revenue forecast revisions

due to elasticity revisions and revisions to new measures, especially after Covid.

1,32%

0,52%

1,83%

0,71%

1,71%

0,64%

0,00%

0,20%

0,40%

0,60%

0,80%

1,00%

1,20%

1,40%

1,60%

1,80%

2,00%

period with Covid

non-Covid period

the macroeconomic forecast is produced by an independent institute

the IBI produces an independent forecast that is not taken up by the government

IBI does not produce macroeconomic forecasts

Public revenue forecasting: who does what in Europe?

Annex IV - Case studies on the governance of revenue forecasts in other European countries

The governance of revenue forecasts in Austria: the production of macroeconomic and public finance fore-

casts by several independent fiscal institutions

Revenue forecasts in Austria are subject to two quality controls.

The first, prior to publication of the govern-

ment's revenue forecast by the Ministry of Finance, is carried out by WIFO (Österreichsches Institut für

Wirtschaftsforschung), which is responsible for the independent production of the macroeconomic forecasts

underlying the government's revenue forecast. The second check takes place after the draft budget has been

sent to the European Commission, prior to the budget debate, when the Fiskalrat, attached to the national

central bank (OeNB), issues an opinion on the state of Austria's public finances.

Growth forecasts are not produced by the government, but have been outsourced to an independent insti-

tute for almost 100 years.

Since 1927, the "macroeconomics and public finance" department of the independ-

ent institute WIFO, which has a staff of 25

, has been publishing forecasts of GDP growth and changes in its

components, as well as producing short- and medium-term unemployment forecasts. In particular, it is re-

sponsible for estimating the output gap.

While the Austrian government produces public finance forecasts, these may not deviate significantly from

the forecasts of the independent fiscal institution,

the Fiskalrat, which in its recommendations may call for

corrective measures to be implemented. The Fiskalrat, which is organically attached to the Austrian central

bank but independent of it, is responsible for ensuring compliance with national budgetary rules. It is made

up of a 15-strong board and a seven-strong secretariat

. To draw up its opinions on the quality of government

public finance forecasts and their compliance with national budgetary rules, the Fiskalrat secretariat has its

own revenue forecasting model which simulates more than 50 types of tax revenue (more than 30 taxes, 8

social security contributions and other non-tax revenues), using forecasting techniques specific to each reve-

nue. It is based on

The public finance forecasts of the independent Austrian budgetary institution can sometimes be published

before the government forecast, which contributes to the sincerity of budget forecasts.

In the spring, before

the publication of the stability programme, it produces "flash" forecasts within a tight timeframe (2 weeks). It

then publishes its opinion and recommendations on the stability programme in June. In the autumn, before

the Finance Bill is examined, the Fiskalrat has four weeks to produce its forecast, which includes all the discre-

tionary measures envisaged by the government in its Finance Bill.

While the Fiskalrat does not have a scientific council, the WIFO institute in charge of macroeconomic forecasts

is supported by a scientific council on strategic issues and scientific debates. This council is made up of 16

internationally renowned researchers.

The case study was reviewed and commented on by the Fiskalrat on 24 February.

The department is made up of 14 economists, 8 research assistants, 2 associate professors and 1 doctoral student.

The secretariat consists of 5 economists, 1 research assistant and a marketing and communications manager.

CPO Note n

11, March 2025

The governance of revenue forecasts in Belgium: an unchanged-policy public finance forecast based on an

independent macroeconomic forecast and comparable with an independent forecast.

The government's revenue forecast in Belgium is based on the macroeconomic forecasts produced by the

Federal Planning Bureau (FPB)

, which is an independent institution also responsible for the ex ante and ex

post analysis of the macroeconomic impact of structural reforms.

The revenue forecast for unchanged policy

, produced by the government,

, can be compared with that produced by the FPB. On the basis of this

forecast, the government assesses the impact on public finances and macroeconomic aggregates of discre-

tionary revenue

and expenditure

measures that

would enable it to achieve the

ex ante

advice from the High

Council of Finance (Conseil supérieur des finances - CSF) on the public finance trajectory.

The Belgian macroeconomic forecasts are produced by the FPB, which is an independent public-interest

body

. As part of its two forecasting exercises known as 'economic budgets', the FPB produces a revenue

forecast on a no-policy-change basis, based in particular on the use of a macro-econometric model

. In addi-

tion to providing information on the economic outlook for Belgium, the FPB carries out some of the tasks

usually assigned to statistical institutes (demographic, energy and transport forecasts) and public policy as-

sessment bodies (measuring the impact of structural public policies on macroeconomic aggregates). The FPB

has also been able to assess the impact of exogenous shocks, such as increases in oil and gas prices. To fulfil

its many missions, the FPB has a staff of around one hundred, including thirty or so people dedicated to mac-

roeconomic and budgetary forecasting.

On the basis of the FPB's macroeconomic forecasts, the Belgian government produces a revenue forecast

on a no-policy-change basis.

In the event of significant deviations from the FPB's revenue forecast, the ad-

ministration's forecast can be compared with that of the FPB, which offers guarantees as to the robustness of

the forecast. This unchanged-policy forecast serves as the basis for discussions in the budget "conclave" on

the new measures to be implemented, in terms of expenditure and revenue, to

at least

achieve the public

finance targets set in the opinions of the High Council of Finance and thus comply with the European budgetary

framework. During the conclave, the government assesses the impact of discretionary measures on public

finances and on the major macroeconomic aggregates, and may call on the FPB, the administration or other

sources to carry out these analyses. However, the quality of the forecast of discretionary measures varies

and is sometimes repeated the following year by the government in the unchanged policy scenario.

Ex post, the FSC issues an opinion on the implementation of the Budget Act and compliance with national

budgetary rules.

It is also responsible for triggering the correction mechanism if it detects a significant devia-

tion. It can also activate the (national) safeguard clause if it concludes that exceptional circumstances exist.

However, the High Council of Finance does not have sufficient human resources to fulfil its

ex-ante

advisory

and

ex-post

control role on its own. Admittedly, the Board has a college of 12 members, half of whom are

appointed by the federal public administration (3 by the central bank, 3 by the government) and the other half

by the communities and regions. However, the secretariat of the FSC has only 1.5 full-time equivalents

. As

the FSC is chaired

ex-officio

by the Governor of the National Bank of Belgium, the Council's opinions regularly

receive technical support from the team in charge of public finances in the National Bank's Research Depart-

ment.

The Belgian federal administration is structured into "federal public services", such as the FPS Finance, which enjoy significant op-

erational autonomy for technical tasks such as forecasting.

Although it comes under the authority of the Prime Minister and the Minister for the Economy.

A working document presents the characteristics of the HERMES econometric model used by the FPB:

Description and use of the

HERMES model | Federal Planning Bureau

As several audits carried out by the Belgian Court of Auditors have pointed out.

In 2023, according to the European Commission's fiscal governance database.

Public revenue forecasting: who does what in Europe?

The German case: revenue forecasts based on macroeconomic assumptions validated by independent re-

search institutes and produced by a collegiate working group chaired by the Federal Ministry of Finance.

Monitoring by the Stability Council and its independent advisory committee

The joint macroeconomic forecast (Die Gemeinschaftsdiagnose)

In Germany, a joint economic forecast is produced twice a year (in April and October) by five independent

economic research institutes (Ifo, DIW, IWH, IfW and RWI). This joint macroeconomic forecast serves as a

reference for the Federal Ministry of Economics (Bundesministerium für Wirtschaft und Energie, BMWi). In

accordance with the "Two Pack" regulation, the forecast of the Federal Ministry of Economics is then submit-

ted to the Joint Economic Forecast for validation.

The working group on tax revenue forecasts (Arbeitskreis Steuerschätzungen)

The main responsibility for tax revenue forecasts in Germany lies with the

Working Group on Tax Revenue

Forecasts

(Arbeitskreis Steuerschätzungen), a council chaired by the Federal Ministry of Finance (Bundesmin-

isterium der Finanzen, BMF). The group is made up of representatives of the BMF, the Federal Ministry of

Economics, the five economic research institutes mentioned above, the Federal Statistical Office (Destatis),

the Bundesbank, the German Council of Economic Experts (Sachverständigenrat) and the finance ministries of

the Länder and local authorities.

The group meets twice a year, in May and November, to update tax revenue forecasts. It takes into account

the Joint Economic Forecast, changes in legislation and other factors likely to influence tax revenues. These

projections are used as a basis for preparing budgets at federal, Länder and municipal level, and also form the

basis for medium-term budget projections.

The Stability Council (Stabilitätsrat)

The

Stability Council

(Stabilitätsrat) is a joint body of the Federation (Bund) and the Länder. Its existence is

enshrined in article 109a of the Basic Law (Grundgesetz) and its aim is to strengthen the institutional frame-

work guaranteeing the long-term sustainability of public finances, both at federal level and for the Länder.

The Council consists of the Federal Minister of Finance, the Finance Ministers of the Länder and the Federal

Minister of Economics. It is co-chaired by the Federal Finance Minister and the President of the Conference of

Länder Finance Ministers.

The Council's main task is to monitor the budgetary situation of the Bund and the Länder on a regular basis,

so that any risk of financial imbalance can be detected at an early stage and appropriate corrective measures

implemented. It also ensures compliance with the "golden rule" (or debt brake) enshrined in the Basic Law, as

well as compliance with European budgetary rules.

The Independent Advisory Committee of the Stability Council (Unabhängiger Beirat des Stabilitätsrats)

The Stability Council is supported by an independent advisory committee made up of experts from various

institutions, including the Deutsche Bundesbank and the German Council of Economic Experts (Sachverstän-

digenrat). This committee issues opinions on compliance with the upper limits for the structural deficit of

general government and, if necessary, makes recommendations for the correction of deficits deemed exces-

sive. The Advisory Committee of the Stability Council is regarded as Germany's independent fiscal institution

(IFI) and is part of the network of IFIs at European Union level.

The case study was the subject of an exchange between the rapporteurs and the European Budget Committee on 6 March 2025.

CPO Note n

11, March 2025

The governance of revenue forecasting in Spain: an independent fiscal institution that carries out high-

frequency macroeconomic and public finance forecasting

Revenue forecasting in Spain, at both national and regional level, is subject to control by a relatively inde-

pendent fiscal institution set up in a fragile budgetary context in 2013, the AIReF (Autoridad Independiente

de Responsabilidad Fiscal).

In order to fulfil its remit, which is set out in an organic law

, the AIReF produces

its own macroeconomic forecasts and public finance forecasts, at both national and regional levels. Every

month, it updates its public finance forecasts for all sub-sectors of the national government.

In Spain, where the territorial organisation leaves a great deal of autonomy to the regions, governments at

central and regional level must

ask the AIReF to draw up a report on the macroeconomic forecasts incorpo-

rated into their budget plans, in which it indicates whether it approves the government forecasts.

To validate

the macroeconomic forecasts underlying the public finance forecast

, the

AIReF carries out its own macroe-

conomic forecasts at national and regional level.

This forecasting exercise is published twice a year: in mid-

April and mid-October.

In addition, in accordance with Directive 2011/85/EU, which requires the macroeconomic and budgetary fore-

casts contained in the budget plans to be regularly assessed in order to improve their quality and detect any

systematic bias

, the AIReF monitors the public finance situation on a monthly basis. It publishes an update

of its public finance forecasts at national level every month.

However, the AIReF often regrets that governments do not provide sufficient information to enable it to make

its forecasts, particularly concerning discretionary measures with a budgetary impact. As a result, the AIReF is

sometimes forced to produce only a no-policy-change forecast, excluding the impact of new tax measures.

In theory, the AIReF's recommendations on the macroeconomic scenario and public finance projections

must be implemented by the government.

If the government decides not to follow them, it must provide a

justification within one month. The AIReF recommendations have given rise to debate on issues such as the

financial sustainability of the social security system and the calculation of the spending rule at national and

regional level. However, in many cases, the government's responses have been late and sketchy.

Finally, to increase transparency, AIReF also carries out an ex-post evaluation of its own forecasts, which serve

as a basis for analysing the degree of compliance with government scenarios and, in the case of macroeco-

nomic forecasts, for validating them.

AIReF also has an Advisory Board which provides technical advice, particularly on the evaluation of cross-cut-

ting policies. The Board's role is exclusively deliberative and technical on issues submitted for consultation by

the President of AIReF. It is made up of 9 members from the academic world.

The case study was checked and commented on by AIReF on 21 February, and was the subject of an exchange between the rappor-

teurs and their team on 6 March 2025.

BOE-A-2013-11935 Ley Orgánica 6/2013, de 14 de noviembre, de creación de la Autoridad Independiente de Responsabilidad Fiscal.

Under the Organic Law of 14 November 2013 on the creation of the AIReF, adopted in application of Regulation (EU) 473/2013, the

macroeconomic forecasts used as a basis for drawing up budget plans and stability programmes must be produced or validated by

independent fiscal institutions.

Public revenue forecasting: who does what in Europe?

The governance of revenue forecasts in Italy: an independent body attached to the Italian Parliament to

supervise budget forecasts and guarantee their accuracy

Italy differs from most other European countries in having a budgetary institution that is directly attached

to Parliament while maintaining functional independence

, whose existence is enshrined in a constitu-

tional law

: the Ufficio Parlamentare di Bilancio (UPB).

Created in 2014 to meet European requirements,

the UPB plays a central role in endorsing macroeconomic forecasts and assessing Italy's public finances.

The UPB has the dual role of endorsing and critically assessing government forecasts.

Each year, it is respon-

sible for examining and approving the macroeconomic assumptions in the Documento di economia e finanza

(DEF), which forms the framework for Italy's budgetary guidelines, and for updating it. If the UPB considers

these assumptions to be unrealistic or over-optimistic, it can refuse to approve them, forcing the government

to revise them or to justify itself if at least one third of the members of the parliamentary committees respon-

sible for public finances so demand. This procedure has already led to adjustments in the government's pro-

jections, notably in 2016 and 2018

, when the UPB refused to endorse the initial macroeconomic forecasts,

which were deemed excessively optimistic.

The UPB is governed by a three-member board, appointed for six-year terms and selected on the basis of

their expertise in economics and public finance following a parliamentary procedure.

It is supported by a

team of around 30 analysts specialising in economic modelling, budget forecasting and public finance. This

team is organised into departments covering macroeconomic analysis, public finance evaluation and analysis

of government revenue and expenditure.

Although the UPB has its own internal econometric models for analysing the plausibility of government

forecasts, it only publishes the latter and not its own public finance forecast

. Its role is therefore twofold: to

validate the macroeconomic assumptions provided by the government, by assessing their robustness and con-

sistency with the overall economic environment, and to assess the plausibility of the government's public fi-

nance forecasts. Its independence is strengthened by the law, which stipulates that the UPB must request and

obtain all unpublished information necessary for the performance of its duties, including exchanges with the

National Statistics Institute, the Ministry of Finance, other ministries, the Tax Agency, the Bank of Italy, etc.

In addition to macroeconomic forecasts, the UPB also publishes assessments of the sustainability of public

finances, budgetary risks and the impact, including the redistributive impact, of tax measures adopted by

the government

The UPB is involved at all stages of the budget process

. Before the budget is presented, it must validate the

macroeconomic forecasts contained in the DEF and its updates. Once the Finance Bill has been submitted to

Parliament, it publishes a detailed analysis of the budget measures and their impact on public revenue and

expenditure. The UPB also carries out an ex-post evaluation, notably as part of its annual report, which makes

it possible to identify and explain the differences between macroeconomic and budgetary achievements and

the initial forecasts or objectives, as well as to shed light on certain issues that vary from year to year.

The UPB is one of the few independent fiscal institutions in Europe to be attached to Parliament in terms of

location and funding. Thanks to this status and its work, it has acquired a central position in the national budget

debate. This special position gives it the ability to exercise its control function without any interference from

the executive or politicians, thus guaranteeing an impartial assessment of public finances.

The case study was checked and commented on by the UPB on 25 February, and was the subject of an exchange between the

rapporteurs and their team on 26 February 2025.

Fasone, Cristina

Note on the Ufficio parlamentare di bilancio nel quadro del costituzionalismo europeo e in prospettiva comparata

Osservatorio sulle Fonti

, no. 2, 2021.

Constitutional Law n. 1/2012

. Lucie Sponchiado.

L'UFFICIO PARLAMENTARE DI BILANCIO

Revue française de finances publiques

2016, 135, pp.243

https://ec.europa.eu/commission/presscorner/detail/en/memo_18_6175.

CPO Note n

11, March 2025

The governance of revenue forecasts in the Netherlands: an independent macroeconomic forecast, which

underpins revenue forecasts and includes the effects of the closure of tax measures

The macroeconomic framework for public finance forecasts in the Netherlands is based on the independent

forecast of the Centraal Planbureau (CPB).

Although it does not comment on the realism of the government's

forecasts or on compliance with national and European budgetary rules,

this independent fiscal authority also

publishes an assessment of the macroeconomic impact of the budgetary measures envisaged by the gov-

ernment at the same time as the budget is presented in the autumn

, although it does not systematically

assess the impact of these measures on public finances in terms of revenue and expenditure.

The macroeconomic forecasts underlying public finance forecasting in the Netherlands have been produced

by the CPB since 1946.

Under the impetus of Nobel Prize-winning economist Jan Tinbergen, director of the

CPB from its creation in 1945 until 1955, the CPB developed macroeconomic and accounting models capable

of analysing and forecasting developments in the Dutch economy. Using these models, a team of 130 people,

including 100 economists and public policy analysts, updates the macroeconomic forecast twice a year. In the

spring, ahead of the publication of the stability programme, the CPB publishes a "central economic plan". In

the autumn, on the day the budget for the following year is presented, the CPB publishes an updated macro-

economic forecast, which takes into account the feedback effect of the measures planned by the government.

Public finance forecasts are not subject to a counter-assessment when the budget is examined.

However,

the CPB does assess the macroeconomic closure effects of government measures, which are then either in-

corporated directly

into its macroeconomic forecast or presented in a dedicated publication

. From time to

time, the CPB also carries out studies on the impact on public finances and redistribution

of certain measures.

In addition, the Dutch Council of State (Raad van State) rules on compliance with national and European budg-

etary rules.

During parliamentary elections, the CPB analyses the long-term sustainability of public finances

and pro-

duces its own public finance forecasts, considering different fiscal policy scenarios. The CPB also analyses the

macroeconomic and public finance impact of the programmes of the various political parties.

Since 1 April 2021, the CPB has also had a Scientific Integrity Committee. Made up of 3 researchers, it ensures

that good research practices are followed within the CPB, as well as the honesty, diligence, transparency and

independence of CPB publications.

The case study was checked and commented on by the Centraal Planbureau on 25 February, and was the subject of an exchange

between the rapporteurs and their team on 10 March 2025.

In Autumn.

In Spring.

Microsimulation models are available for this purpose.

Public revenue forecasting: who does what in Europe?

Governance of revenue forecasts in Portugal: an independent council guarantees the reliability of revenue

forecasts and fiscal sustainability

Created in 2011 and operational since 2012, the Portuguese Public Finance Council (Conselho das Finanças

Públicas, CFP) is an independent body responsible for monitoring and assessing Portugal's public finances.

Like the Spanish AIReF, it was created in the context of the sovereign crisis of 2009-2012, when many European

countries were seeking to cement the credibility of their commitment to sustainable public finances. Its work

is part of a system designed to ensure budgetary discipline, fiscal transparency and the sustainability of public

debt. To this end, it analyses the macroeconomic scenarios adopted by the government, the consistency of

budget forecasts with these scenarios and compliance with established budgetary rules.

The PSC prepares its own revenue projections on a no-policy-change basis and critically assesses the fore-

casts presented by the government

. For example, in its assessment report on the draft budget for 2024

, it

examines the plausibility of the trajectory of the main budgetary indicators in the light of its own forecasts,

expressed as a percentage of GDP.

The Council is run by a board consisting of a chairman and four members, appointed for a single seven-year

term, with the exception of the non-executive members whose term may be renewed once

. It is supported

by a technical team of experts in public finance and economic modelling, responsible for monitoring the

budget path and comparing government forecasts with European requirements. The MFF's analysis is based

on a rigorous methodology, including not only the government's projections, but also other available macro-

economic forecasts, notably those of the Bank of Portugal, the European Commission and the International

Monetary Fund.

Part of the MFF publication schedule is aligned with the main stages of the budget cycle.

For example, it

issues an opinion on the reliability of the macroeconomic forecasts before the draft budget is presented to

Parliament.

The CFP also publishes its macroeconomic and budgetary projections twice a year, covering a five-year hori-

zon.

Previously, it was involved in the publication of the previous Stability Programme and continues to carry

out an annual assessment of budget implementation, updating its observations on the development of public

finances.

The CFP maintains regular relations, both nationally and internationally, with the Bank of Portugal, the Na-

tional Statistics Institute (INE) and the European Commission in the context of the European Semester

. It

also collaborates with other independent fiscal institutions, with a view to strengthening its evaluation meth-

ods and ensuring analytical consistency at European level.

Since its creation, the MFF has played a key role in improving the reliability of government revenue forecasts,

encouraging the authorities to adopt a more cautious approach to budget scenarios.

The case study was checked and commented on by the Conselho das Finanças Públicas on 7 March, and was the subject of an

exchange between the rapporteurs and their team on 11 March 2025.

Conselho das Finanças Públicas.

Análise da Proposta de Orçamento do Estado para 2024

. Relatório n.º 10/2023, 25th October 2023.

CPO Note n

11, March 2025

The governance of revenue forecasts in the United Kingdom: an independent body at the heart of the Brit-

ish budgetary process and guarantor of the transparency of forecasts

Created in 2010, the Office for Budget Responsibility (OBR)

is responsible for producing the official eco-

nomic and fiscal forecasts that the UK government uses to prepare its budget.

As an independent budget

body, its mission is to ensure the credibility and transparency of the UK's public finances by providing impartial

analysis based on independent and transparent forecasts. Its governance model and broad remit make it one

of the OECD's leading independent budget institutions

. The creation of the OBR was a direct response by

the new Conservative government to the repeated manipulation of macroeconomic and fiscal forecasts to

ensure

ex-ante

compliance of budgets with a defined fiscal rule over a business cycle.

The OBR plays a key role in the budget process: it produces two major forecasts each year, in the form of

the Economic and Fiscal Outlook (EFO), published in March and November, which is the key reference for

all budget decisions.

These forecasts include a detailed estimate of public revenues from over 30 taxes and

social contributions, as well as an assessment of the impact of the tax measures announced by the govern-

ment. In addition, the OBR publishes an annual Forecast Evaluation Report, which compares its projections

with actual outcomes, in order to improve the quality of forecasts and identify possible sources of error.

The OBR is managed by a Budget Responsibility Committee (BRC) made up of three members, appointed

for five-year terms.

They have considerable autonomy in the choice of forecasting methods and underlying

assumptions. The BRC is supported by a permanent team of around 50 specialists in economics and public

finance, divided into specialised divisions: economic forecasting, budget forecasting, analysis of social protec-

tion spending and long-term fiscal sustainability.

Unlike some countries where macroeconomic forecasting is outsourced, the OBR produces its own projec-

tions using in-house economic models and scenarios

. However, it does not produce its revenue forecasts

entirely on its own: its work is carried out in collaboration with HM Revenue & Customs (HMRC), which pro-

vides the tax models and detailed tax data. The OBR then assesses the impact of government policies and

economic assumptions to refine its projections.

The forecasting schedule follows a precise timetable, aligned with the UK budget cycle.

The OBR has 10

weeks, divided into five forecast series

, to prepare the EFO, including, in the last two series, analysis of the

Government's discretionary measures (the fifth and final series being published in the EFO on the same day

as the Government Budget). The OBR also plays a key role in assessing fiscal policies and their long-term con-

sequences, publishing thematic reports on the sustainability of public finances. The OBR's independence is

guaranteed by a legislative framework that prohibits any political interference in its work, thereby strength-

ening its credibility and the objectivity of its analyses.

The independent publication of the OBR forecasts, including the costings of new measures validated by the

OBR, at the same time as the announcements of budget decisions, contributes to greater transparency and

better budgetary discipline

. With the exception of the September 2022 "mini-Budget", for which no economic

or budget forecast was requested, all major budgets and financial statements have been accompanied by an

OBR forecast.

The case study was checked and commented on by the OBR on 18 February.

https://obr.uk/

Lisa von Trapp & Peter Fontaine & Michal Horvath & Gemma Telow, 2021. "

OECD Review of the Office for Budget Responsibility in

the United Kingdom

OECD Journal on Budgeting

OECD Publishing, vol. 21(2), p. 163-222

Institute for Government.

OBR Supply Policy Forecasting

. 2024.