The concept of “fiscal rules” rarely sets the heart racing. Indeed, voters and far too many politicians are keener on indulging culture war issues. Yet few things could be more fundamental than the framework by which governments tax, spend and, critically, borrow.
Labour’s fiscal rules, as set out in its 2024 election manifesto, commits the party to balancing the current budget (that is, day-to-day spending) while allowing for borrowing to invest) and ensuring debt is falling as a share of the economy by the fifth year of the forecast. But it has now been widely reported that the Chancellor is set to relax those rules, in a way that may free up tens of billions of pounds for capital projects.
Few can doubt that Britain needs investment. Our infrastructure is creaking, while the cuts to HS2 have been an embarrassment that will store up problems for the future. Moreover, the joining of public and private investment is key to sustainable economic growth and fixing this country’s poor productivity rates.
Yet Rachel Reeves must also know the risks. She promised to be something of an iron Chancellor. Her party has frequently pointed to a £22 billion black hole bequeathed by the previous administration. Any unexpected borrowing has the potential to spook the markets, thereby sending up borrowing costs for government and households alike.
Reeves is right to take bold action. But she must tread carefully.
Root the Great
For some it will be Len Hutton, Herbert Sutcliffe or Wally Hammond. But in terms of sheer weight of runs, none match Joe Root. The former England captain today became his nation’s greatest test run scorer, surpassing Sir Alastair Cook’s 12,472 runs in his 147th match.
At the age of just 33, should he stay fit and motivated, Root has every chance of overhauling the great Sachin Tendulkar, who scored 15,921 runs in 200 test matches. At home and abroad, against pace and spin, Root has demonstrated his mastery of the sport. England fans know how lucky they are to have him.
