Friday, July 18, 2008
Borrowing up, fiscal rules may be rewritten
Posted by David Smith at 10:00 AM
Category: Thoughts and responses

The latest numbers for the public finances make grim reading for the Treasury. Revenues are being hit by the weakening economy, so public sector net borrowing in June was 9.2 billion, compared with 6.3 billion a year earlier. In the April-June period net borrowing was 24.4 billion, up from 14.7 billion in April-June 2007. So a clear worsening, detailed here, at a time when the Financial Times has reported that the Treasury is considering a rewrite of the fiscal rules.

The Treasury has hinted before that the end of the economic cycle would provide an opportunity for reassessing the fiscal rules. But any change in the coming months will smack of political expediency.