Fiscal rebalancing plans in the medium term: the case of the United Kingdom
Júlia Brunet and
Susana Parraga Rodriguez
Economic Bulletin, 2021, issue 2/2021, No 15
The extraordinary fiscal policy response to mitigate the strong economic impact of the COVID-19 pandemic has pushed public debt notably higher, exceeding its peak levels of the last five decades in the main advanced economies. Additionally, support for the economic recovery will foreseeably require maintaining a sizeable fiscal impulse in the short term. In this setting, announcing mediumterm plans to rebalance public finances would be suitable, according to the studies available. These plans recoup the countercyclical room for manoeuvre of fiscal policy, as well as anchor economic agents’ expectations and reduce the potential risks of high government indebtedness for future economic activity. This article describes the example of the United Kingdom, the first country to propose a gradual fiscal adjustment programme for the medium term, while maintaining public support for the economic recovery in the short term.
Keywords: sovereign debt; fiscal policy; policy coordination. (search for similar items in EconPapers)
JEL-codes: E61 E62 H63 (search for similar items in EconPapers)
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