No set of fiscal rules or fiscal institutions will ever be perfect. Even if they are good in theory, their operation and interaction with public opinion and market sentiment may make them less than optimal in practice. It’s important, therefore, to regularly question them and ask whether they are helping deliver the outcomes the country needs.
In our submission to the Lords Economic Affairs Committee’s inquiry on the fiscal rules, we recommend moving away from fixed numeric targets towards more judgement-based decisions so there is greater flexibility and sensitivity to the economic cycle; creating a ‘preventative’ category of spending with the fiscal rules targeting a balanced budget in the current spending category; and greater fiscal devolution so that the centre does not bear all the strain.
Our responses build on work already undertaken and/or in the pipeline, namely: Rebuilding the Nation 01: Progressive principles for effective investment (2023); Mission Critical 01: Statecraft for the 21st Century, (2024) in partnership with the Institute for Innovation and Public Purpose; Impactful Devolution 01: A new framework for inclusive local growth and national renewal (2024), in partnership with Metro Dynamics.