The Bank of England sets interest rates against a published remit, which includes a target rate for inflation. It produces an Inflation Report which is scrutinised closely by outside commentators. The Code for Fiscal Stability and Departmental Resource Accounts are bringing a similar transparency to fiscal policy and public expenditure respectively. The Treasury publishes the forecasts of other leading authorities alongside its own in Budget and Pre-Budget reports. In recent years it has issued a wide range of papers explaining policy and analysis, for example, the series on The Modernisation of Britain s Tax and Benefit System and Analysing UK Fiscal Policy .
Prudence ensures that there is sufficient leeway to manage downside risks if they arise.
The projections of the public finances which are published in annual Budgets and Pre-Budget reports are always founded on prudent assumptions and tested against a cautious case of trend growth 1 percentage point lower than the central estimate. The key assumptions are audited by the National Audit Office. On the expenditure side of the public finances the main responsibility for managing most risks falls to individual Departments. To help manage those exceptional cases where the effects of risk cannot be borne by an individual Department s budget the Treasury maintains a public spending reserve. Review of risk 14.