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UK Fiscal Prospects

Published online by Cambridge University Press:  26 March 2020

Ray Barrell  and
Simon Kirby
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Extract

The UK is restructuring the fiscal policy framework once again, with an intention to move toward independent assessment and forecasting in the budget process. At the same time a large-scale, if delayed, fiscal consolidation is planned at a time when there is significant spare capacity in the economy. Economic growth is also projected to be below trend, at least this year and perhaps next. It is unusual to see a fiscal tightening when the output gap appears to be widening. These policy settings should be seen in the context of the most radical change in the nature of the relationship between the government and the economy for at least thirty years. This note assesses the impact of the new programme on the economy as well as setting out a projection for the medium-term public finances.

Type
The UK Economy
Information
National Institute Economic Review , Volume 213 , July 2010 , pp. F66 - F70
Copyright
Copyright © 2010 National Institute of Economic and Social Research

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References

Barrell, R., Fic, T. and Liadze, I. (2009a), ‘Fiscal policy effectiveness in the banking crisis’, National Institute Economic Review, 207, January, pp. 43–50 with a longer version with the same title on the NIESR website referred to as (2009b).CrossRefGoogle Scholar
Barrell, R., and Kirby, S. (2010), ‘Medium-term prospects for the public finances’, National Institute Economic Review, 212, April, pp. 60–67.CrossRefGoogle Scholar
Barrell, R. and Weale, M.R. (2009), ‘The economics of a reduction in VAT’, Fiscal Studies, 30, 1, pp. 17–30.CrossRefGoogle Scholar
Larch, M. and Turrini, A. (2008), ‘Received wisdom and beyond: lessons from fiscal consolidation in the EU’, European Economy Economic Paper 320.CrossRefGoogle Scholar