Former Bank of England Governor Slams Reeves Over Fiscal Rules – Guido Fawkes

Former Bank of England Governor Slams Reeves Over Fiscal Rules

Former Bank of England governor Mervyn King has made a rare intervention on economic policy today, this time against the Chancellor’s constantly-promoted fiscal rules in the Lords:

“The Chancellor of the Exchequer deserves sympathy for the difficult fiscal position which she inherited but unfortunately her new fiscal rules are flawed when non-negotiable fiscal rules meet reality my money is on the latter.”

King goes on to say the rolling three-year horizon forecast metric for national debt to be falling is “Augustinian” and that capital spending in the public sector rarely generates meaningful income for the Treasury. King says “the choice between raising taxes or cutting spending should not be deferred by resort to a rolling horizon”…

Along with those who see the rules as flawed and arbitrary there is an increasingly loud chorus of left-wing Labour MPs who want the rules changed to allow for spending rises. Reeves has changed the rules before – altering public sector net debt to public sector net financial liabilities to allow for higher capital spending at the Budget. Keir’s reluctance to back the rules as they currently stand suggests they will be changed in the future to Downing Street’s liking…