Fiscal rules and the new fiscal programme

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Chapter 7 in After Brexit, What Next?, 2020, pp 127-150 from Edward Elgar Publishing

Abstract: As we move out of the coronavirus crisis, fiscal policy needs to be guided by long term rules about government solvency; these project the future long term public sector balance sheet, rather than imposing short term rule-of-thumb constraints on current budgets or borrowing. Owing to interest rates being close to zero, the long run cost of the huge Covid debt is rather small. This means that post-Covid and post-Brexit the government can continue to be bold in fiscal policy, making tax cuts and allowing infrastructure spending that create growth which in turn will create the extra revenue required to pay for it. We show how a programme of continued borrowing in the order of £100 billion a year is affordable on UK post-Brexit projections, after the Covid package has been financed and the economy has recovered from the crisis.

Keywords: Economics and Finance; Environment; Law - Academic; Politics and Public Policy (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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