Treasury may bend fiscal rules
The Treasury looks set to bend its own rules on borrowing – the same rules upon which Gordon Brown staked his reputation as chancellor.
Current rules limit the amount the government can borrow over an economic cycle to 40 per cent of nation income.
However, with the slowing economy and property market hitting tax receipts, the government is stuck between borrowing more and breaking the rules or raising taxes.
New fiscal rules could be announced in the autumn pre-Budget report.
However, a changing of the rules is allowed at the end of the economic cycle.
In response to the reports a Treasury spokesman described the suggestions of rule bends as: “speculation”.
“We have always said we would look at [at the fiscal rules] when the economic cycle come to an end.”
The end of the cycle is set in the Office of National Statistics Blue Book.
A Conservative Party spokesman said: “If this is true, it puts the final nail in the coffin of Gordon Brown’s reputation for economic competence.
“He repeatedly staked that reputation on his fiscal rules, and now we’re told that the Treasury is having to re-write the rules because the government has lost control of the public finances.”
