Fiscal rules under review

Last Modified: 18 Jul 2008
Source: ITN

Alistair Darling has said the rules on how much Britain can borrow are under review.

At the moment, the Treasury cannot break the present borrowing limit of 40 per cent of national income, but it has been suggested that the rules be changed to allow the Government to effectively extend Britain's overdraft.

Mr Darling has insisted that "no decision" had been taken on the future of the Government's fiscal rules.

With Treasury revenues being squeezed by the faltering economy, the Chancellor admitted the framework was "under review", but stressed no announcement would be made until the autumn.

However, he appeared to hint at a rethink by pointing out that Government borrowing levels in Britain were currently lower than in most other major economies, including France, Germany, Italy and the US.

Figures from National Statistics have indicated that public sector borrowing is perilously close to 40 per cent, having reached a higher than expected £9.2 billion in June.

Net debt stood at 38.3 per cent of GDP, up one percentage point on a year ago.

Liberal Democrat Treasury spokesman Vince Cable said fiscal policy should be put in the hands of an independent body to stop the Government "fiddling" the figures.

"The fiscal rules have no credibility when the Government keeps fiddling or changing them," he said.

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