User:Nick Gardner /Sandbox: Difference between revisions
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By 2007–08, the public finances were in a stronger position than they had been when Labour came to power in 1997. Though public spending increased from 39.9% in 1996–97 to 41.1% in 2007–08 (an increase of 1.2 percentage points), over the same period revenues grew by 2.3 percentage points, meaning that total borrowing fell by 1.0 percentage point over this period (figures do not sum due to rounding). With more being spent on investment in 2007–08 than in 1996–97, the current budget (that is, the difference between current revenues and spending on non-investment items) strengthened even more – from a deficit of 2.7% of national income in 1996–97 to a deficit of just 0.3% of national income in 2007–08. Meanwhile, public sector net debt fell from 42.5% of national income to 36.5%, as the UK economy grew faster than the accumulation of new borrowing | By 2007–08, the public finances were in a stronger position than they had been when Labour came to power in 1997. Though public spending increased from 39.9% in 1996–97 to 41.1% in 2007–08 (an increase of 1.2 percentage points), over the same period revenues grew by 2.3 percentage points, meaning that total borrowing fell by 1.0 percentage point over this period (figures do not sum due to rounding). With more being spent on investment in 2007–08 than in 1996–97, the current budget (that is, the difference between current revenues and spending on non-investment items) strengthened even more – from a deficit of 2.7% of national income in 1996–97 to a deficit of just 0.3% of national income in 2007–08. Meanwhile, public sector net debt fell from 42.5% of national income to 36.5%, as the UK economy grew faster than the accumulation of new borrowing | ||
By 2007 Labour had reduced public sector borrowing slightly below the level it inherited from the Conservatives. And more of that borrowing was being used to finance investment rather than the day-to-day running costs of the public sector. Labour had also reduced public sector debt below the level it had inherited. As a result the ‘golden rule’ and ‘sustainable investment rule’ that Gordon Brown had committed himself to on becoming Chancellor in 1997 were both met over the economic cycle that he eventually decided had run from 1997–98 to 2006–07. | |||
The Code for Fiscal Stability, which set out the broad principles of fiscal policy, as well as requiring the Treasury to be transparent about its goals and record; and | |||
Publicly stated fiscal rules, which turned broad principles of ‘sound’ fiscal policy into specific operational targets against which success or failure could be judged. These were: | |||
o The golden rule, which required the public sector to borrow only to pay for capital investment. This was judged on average over the economic cycle, rather than every year. | |||
The sustainable investment rule, which required the Government to keep the public sector’s debt (net of its short-term financial assets) at a ‘stable and prudent’ level. The Treasury defined this as less than 40% of national income (GDP) at the end of each financial year of the economic cycle. | |||
Revision as of 03:26, 17 May 2010
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The public finances: 1997 to 2010
Robert Chote, Rowena Crawford, Carl Emmerson and Gemma Tetlow1
http://www.ifs.org.uk/bns/bn93.pdf
By 2007–08, the public finances were in a stronger position than they had been when Labour came to power in 1997. Though public spending increased from 39.9% in 1996–97 to 41.1% in 2007–08 (an increase of 1.2 percentage points), over the same period revenues grew by 2.3 percentage points, meaning that total borrowing fell by 1.0 percentage point over this period (figures do not sum due to rounding). With more being spent on investment in 2007–08 than in 1996–97, the current budget (that is, the difference between current revenues and spending on non-investment items) strengthened even more – from a deficit of 2.7% of national income in 1996–97 to a deficit of just 0.3% of national income in 2007–08. Meanwhile, public sector net debt fell from 42.5% of national income to 36.5%, as the UK economy grew faster than the accumulation of new borrowing
By 2007 Labour had reduced public sector borrowing slightly below the level it inherited from the Conservatives. And more of that borrowing was being used to finance investment rather than the day-to-day running costs of the public sector. Labour had also reduced public sector debt below the level it had inherited. As a result the ‘golden rule’ and ‘sustainable investment rule’ that Gordon Brown had committed himself to on becoming Chancellor in 1997 were both met over the economic cycle that he eventually decided had run from 1997–98 to 2006–07.
The Code for Fiscal Stability, which set out the broad principles of fiscal policy, as well as requiring the Treasury to be transparent about its goals and record; and Publicly stated fiscal rules, which turned broad principles of ‘sound’ fiscal policy into specific operational targets against which success or failure could be judged. These were: o The golden rule, which required the public sector to borrow only to pay for capital investment. This was judged on average over the economic cycle, rather than every year. The sustainable investment rule, which required the Government to keep the public sector’s debt (net of its short-term financial assets) at a ‘stable and prudent’ level. The Treasury defined this as less than 40% of national income (GDP) at the end of each financial year of the economic cycle.