LONDON, April 28 (Reuters) – British finance minister Rachel Reeves should explicitly aim to bring public debt below its current level within the next three years, rather \u200cthan simply halt its current rise, a committee of Britain’s upper house of \u200cparliament said on Tuesday.<\/p>\n
The House of Lords’ Economic Affairs Committee said Reeves’ fiscal rules – which she set out \u200bin October 2024 – were not tough enough to stop public debt rising as a share of the economy over the long term.<\/p>\n
“The UK’s fiscal framework is frail. The government’s behaviour must change with significantly larger fiscal buffers becoming the norm and these buffers not being used as \u200ca piggy bank that can \u2060be ‘raided’,” said committee chair Stewart Wood, a member of Reeves’ Labour Party.<\/p>\n
British finance ministers’ self-imposed fiscal rules have loomed over budget decisions since 2010 \u2060when the newly created Office for Budget Responsibility took over fiscal forecasting from the finance ministry.<\/p>\n
The rules have regularly been tweaked since then but have generally aimed at some form of balanced budget \u200bin \u200bthe medium term as well as lower debt \u200bas a share of GDP.<\/p>\n
Despite this, \u200cBritain’s public sector net debt has risen from 61% of gross domestic product in 2009\/10 to 95% of GDP by 2025\/26 – mostly due to big rises in the COVID-19 pandemic and the global financial crisis.<\/p>\n
Reducing debt faster during normal times and maintaining bigger fiscal buffers against economic shocks was needed to stop future crises causing a longer-term rise in debt \u200cto unsustainable levels, the committee said in a report \u200bon Britain’s fiscal rules.<\/p>\n
“The current fiscal rules have retained \u200ba notable flaw from their predecessors: \u200bby requiring that debt must be falling by the third year of \u200ca rolling forecast, the supplementary target can \u200bstill be met by \u200bpromises of policy action which are never fulfilled,” it said.<\/p>\n
Under the government’s latest budget forecasts in March, Reeves’ preferred debt measure, public sector net financial liabilities, is \u200bon course to rise from \u200c82.4% of GDP in 2025\/26 to 82.9% in 2028\/29. Headroom against her balanced \u200bbudget goal amounts to 0.7% of GDP, making it vulnerable to economic \u200bshocks.<\/p>\n
(Reporting by David Milliken; editing by Suban Abdulla)<\/p>\n","protected":false},"excerpt":{"rendered":"LONDON, April 28 (Reuters) – British finance minister Rachel Reeves should explicitly aim to bring public debt below…\n","protected":false},"author":2,"featured_media":23637,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[10617,1820,10620,10618,10616,182,10619,5,6,10621],"class_list":{"0":"post-23636","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uk","8":"tag-balanced-budget","9":"tag-finance-minister","10":"tag-fiscal-framework","11":"tag-fiscal-rules","12":"tag-public-debt","13":"tag-rachel-reeves","14":"tag-the-house-of-lords39-economic-affairs-committee","15":"tag-uk","16":"tag-united-kingdom","17":"tag-upper-house-of-parliament"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/116479501463136248","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/23636","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/comments?post=23636"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/23636\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/23637"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=23636"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=23636"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=23636"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}