Today’s risk-averse economic climate calls for increased public investment to attract reluctant private capital. But British Prime Minister Keir Starmer’s insistence on adhering to strict fiscal rules casts doubt on his ability to pull the United Kingdom out of its economic malaise.
LONDON – In a recent speech, the United Kingdom’s new Chancellor of the Exchequer, Rachel Reeves, reiterated her commitment to “fiscal rules.” These rules require that “the current budget must move into balance” and that “the [national] debt must be falling as a share of the economy by [the Labour government’s] fifth year.” This involves reducing the debt-to-GDP ratio from its current level of 100% within five years and eliminating the budget deficit, which stands at £121 billion ($157 billion), or 4.4% of GDP.
LONDON – In a recent speech, the United Kingdom’s new Chancellor of the Exchequer, Rachel Reeves, reiterated her commitment to “fiscal rules.” These rules require that “the current budget must move into balance” and that “the [national] debt must be falling as a share of the economy by [the Labour government’s] fifth year.” This involves reducing the debt-to-GDP ratio from its current level of 100% within five years and eliminating the budget deficit, which stands at £121 billion ($157 billion), or 4.4% of GDP.