The Office for Budget Responsibility under its new leadership today issued a 152-page report that makes rounding error changes to the economic and fiscal forecasts presented at the time of the June Budget. One of the few significant amendments is a downward revision to the loss of general government jobs over the next four years, from 490,000 to 330,000, although – like all the numbers in the report – this is "subject to a large degree of uncertainty".

The basic story is that a below-par but sustained economic recovery combined with the coalition's tax and spending plans will return the public finances to sustainability by 2015-16. Growth will be constrained, according to the OBR, by tight credit conditions, desired private sector debt reduction and the fiscal consolidation itself.

The OBR, like the consensus, is probably too downbeat about economic prospects. Forecast GDP growth of 2.4% per annum over the five years 2010-14 compares with 3.4% achieved over 1994-98 despite fiscal retrenchment on a similar scale. Claims that the private sector is in a weaker position to take up the baton than in the early 1990s are unconvincing: corporate finances are in better shape and households have been insulated from the consequences of higher debt by low interest rates, resulting in fewer arrears cases and repossessions. There were similar concerns about credit supply in the 1990s, following a large hit to banks' capital from residential and commercial property busts.

Rather than a growth shortfall, the key risks to the fiscal outlook are that, first, the coalition fails to implement planned spending cuts and / or tax increases yield less revenue than expected and, secondly, higher interest rates boost debt servicing costs. A useful ready-reckoner table on page 117 of the report shows that each 1 percentage point rise in interest rates and inflation raises debt interest spending in 2015-16 by £10.7 billion, or 0.6% of GDP.