The news that the government’s independent fiscal watchdog, the Office for Budget Responsibility, is about to slash its forecasts should not have come as a surprise. The chancellor’s fiscal plans were based on forecasts dating back to March this year and already looked to be, once again, too optimistic. The IMF, the OECD and, most notably, the Bank of England, have already sounded a more pessimistic tone and, to an extent, this is just the OBR playing catch up.

But even if the news isn’t exactly unexpected, it is still a political headache for the chancellor, and perhaps goes some way to explaining the modesty of the giveaways at this week’s Conservative conference. In his autumn statement of 2016, Philip Hammond relaxed the fiscal rules and gave himself plenty of room for manoeuvre, but that space is now vanishing, just when the political pressure for higher spending is on the rise.

Productivity estimates rarely feature in a chancellor’s budget day speech, even as one of the most important variables

The forecasts have many moving parts. Unemployment is coming in lower than the OBR expected, and the public finances so far this year have looked a touch healthier than anticipated, both of which will provide the Treasury with some much needed relief. On the other hand, interest rates are now expected to rise faster than previously, putting some upward pressure on debt servicing costs. All of these, though, pale in importance when compared with Britain’s persistent productivity disaster.

The broad-brush picture of the British economy since 2009 and the end of the recession has been of tepid economic growth and rapid jobs growth. Bringing the two together has been exceptionally weak productivity.

Productivity growth, the ability to get more economic output from the same amount of inputs, is the key to long-term growth. It’s been essentially flat in the UK for seven years. Sadly for the chancellor, the public finances and prosperity, those biblical seven lean years look unlikely to be followed by seven years of plenty.

There are two ways to grow an economy: to employ more resources or to get more out of existing ones. Over the last almost decade, the UK has been relying on the former. Growth has been driven by using up what economists call “spare capacity”, hence the unemployment rate being pushed to multi-decade lows. In the three or so decades before 2008, output per hour worked grew by 2% to 2.5% per annum – that came to be regarded as normal.

For years now, the OBR has produced variants on the same basic view: that productivity growth will finally start to pick up “next year”, but next year never seems to come. As recently as March, they expected productivity growth of 1.5% this year. The hard data, though, is pointing to a fall of 0.2%.

Slowly but surely, as the productivity shortfall has dragged on, the OBR has become more downbeat on our long-term prospects. With spare capacity almost exhausted (in economic parlance, the “output gap” – which measures the amount of spare economic capacity – has been essentially closed), the UK risks hitting serious barriers to growth unless productivity suddenly bounces. The OBR now looks set to downgrade, once again, its medium-term view on productivity growth. The Bank of England already has.

A lower view of productivity growth means an expectation of slower economic growth in the years ahead. That’s an obvious problem for living standards, but also a problem for the chancellor, as it means weaker tax receipts than expected.

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Robert Chote, the head of the OBR, noted in July that if productivity growth was just 0.3 percentage points lower than they forecast each year, then half of the £26bn of fiscal headroom that the government has relative to its targets for 2020/21 would vanish.

Productivity estimates rarely feature in a chancellor’s budget day speech, even if they are one of the most important economic variables. This budget looks set to follow a now all-too-familiar pattern. Hammond will rattle over the economic numbers in his address, putting the best gloss on them possible, and then announce a few (relatively cheap) giveaways to attempt to grab the headlines. Once he sits down, though, and the OBR forecasts are published, the real news of the day will emerge from those numbers. That news is unlikely to be cheerful.

• Duncan Weldon is head of research at the Resolution Group. He was previously economics correspondent at BBC Newsnight