The UK will continue to have one foot hovering precariously over a fiscal abyss unless the next government draws up a strong set of rules to tackle the £1.1 trillion national debt.
Money for Nothing argues that new fiscal rules should bind future governments to a spending envelope based on reducing the UK’s debt-GDP ratio to a sustainable level. It is currently projected to exceed 100% of GDP by 2015, the highest level since modern records began. Strict penalties would be put in place to ensure that politicians stayed within the rules including automatic nominal freezes to public sector pay, the state pension and benefit payments.
Since 1965, the UK will have borrowed more than it has taken in for 49 out of the 53 years. Without a clear set of fiscal rules, strictly enforced by the Office for Budget Responsibility (OBR), the UK will remain too indebted, causing the economy to grow more slowly and limiting its ability to take effective tax and spending decisions to combat future recessions. Other challenges – such as an ageing population and a decline in North Sea oil production and revenue – make having this flexibility even more important
The UK will continue to have one foot hovering precariously over a fiscal abyss unless the next government draws up a strong set of rules to tackle the £1.1 trillion national debt.
Money for Nothing argues that new fiscal rules should bind future governments to a spending envelope based on reducing the UK’s debt-GDP ratio to a sustainable level. It is currently projected to exceed 100% of GDP by 2015, the highest level since modern records began. Strict penalties would be put in place to ensure that politicians stayed within the rules including automatic nominal freezes to public sector pay, the state pension and benefit payments.
Since 1965, the UK will have borrowed more than it has taken in for 49 out of the 53 years. Without a clear set of fiscal rules, strictly enforced by the Office for Budget Responsibility (OBR), the UK will remain too indebted, causing the economy to grow more slowly and limiting its ability to take effective tax and spending decisions to combat future recessions. Other challenges – such as an ageing population and a decline in North Sea oil production and revenue – make having this flexibility even more important
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