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An Assessment of Fiscal Rules in the United Kingdom
Author:
Mr. Michael Kell
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Series:
IMF Working Papers
Volume/Issue:
Volume 2001: Issue 091
Language:
English
Publication Date:
01 Jul 2001
DOI:
https://doi.org/10.5089/9781451851519.001
ISBN:
9781451851519
ISSN:
1018-5941
Pages:
36
Keywords:
WP; U.K. government; investment rule; government spending; fiscal rule; gross investment; monetary policy; Fiscal rules; fiscal sustainability; intergenerational equity; transparency; U.K. situation; U.K. case; nominal interest rate; U.K. rule; definition of sustainability; Capital spending; Current spending; Western Europe
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The paper assesses the United Kingdom's golden rule and debt rule against "ideal characteristics" of fiscal rules. It concludes that they are clearly defined; transparent in institutional arrangements and measurement; adequate to ensure sustainability; and strike a good balance between flexibility and enforceability. The rules could be strengthened by clarifying the benchmark embodied in the debt rule and the modalities of the "value for money" criterion for investment. Overall, the fiscal framework establishes the necessary preconditions for a credible fiscal policy, but the credibility of the rules could be undermined by the large gap between them and actual medium-term fiscal plans.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund