UNIONS have called for a full review of the Office for Budget Responsibility (OBR), slamming it for clinging to a “self-defeating logic of austerity.”

TUC general secretary Paul Nowak told Chancellor John Healey on Saturday that only a “root-and-branch” overhaul can fix the OBR and stop it from preventing “good growth around the country.”

He called on the newly promoted minister to use his first Budget in October to re-evaluate the watchdog’s assessment criteria, particularly criticising the OBR for downplaying the benefits of public investment.

The TUC also echoed calls from various think tanks and campaign groups to restructure the independent forecaster, including by Progress, from the right of the Labour Party, and the leftwing New Economics Foundation.

Mr Nowak said: “For too long, the OBR has been a millstone preventing good growth.

“The world has moved on from the self-defeating logic of austerity, but the OBR models still bake in its false assumptions. Only a root-and-branch review can bring the OBR into the modern economic mainstream.”

The TUC has also demanded Mr Healey beef up investment bodies such as the National Wealth Fund (NWF).

Mr Nowak said: “Amid global economic turmoil, Labour has delivered the second fastest growth in the G7. That’s partly down to the government’s fiscal rules that rightly allow more borrowing for investment.

“But the government needs to do more to release the handbrake. An ambitious application of the existing fiscal rules and a wider mandate for the NWF can reindustrialise Britain.

“While Healey has been saying all the right things, it’s what the new administration does that will be key. If the first move is to loosen policy, despite no underlying improvement in the public finances, that risks sending a signal that markets won’t like.”

New OBR chair Jonathan Haskel told MPs on the Treasury select committee last month that he was more pessimistic than other experts, saying the country was “not in a very good fiscal position.”

Economists have predicted the British economy will record another quarter of growth, despite the fallout of the US war on Iran.

Office for National Statistics data set to be published on Thursday is expected to reveal resilience in the economy.

A Treasury spokesperson said: “Fiscal discipline is the bedrock of economic stability and national security.”