Last night Alistair Darling killed off Gordon Brown's much trumpeted fiscal rules in his Mais lecture (though failed to outline what will go in their place). The Chancellor said last night: “To apply the fiscal rules in a rigid manner today would be perverse.” The basic argument of the government now is that times have changed and therefore so should the fiscal rules. Darling made this point yesterday also: "It is natural that the conduct of policy should evolve. Just as markets change, so should policy."
Hang on a minute... as George Osborne has noted, wasn't the whole point of the fiscal rules that they were designed explicitly to take account of the economic cycle?
Didn't Gordon say:
"The new ambition for our country is long-term economic strength and stability based on an unshakeable commitment to prudent monetary and fiscal rules." (Financial Statement - 17 March 1998)
"Our fiscal rules are set not for a year or even two years, but for the entire economic cycle... at all times—now and in the future—we will never compromise our commitment to meet our fiscal rules and disciplines" (Budget Statement - 17 April 2002)
"Our monetary and fiscal foundation, which is based on the independence of the Bank of England, imposes a symmetrical target for inflation, requires debt at low levels, holds to tough fiscal rules over the economic cycle and is thus designed not just for times of high growth, but for a global contraction with all its attendant difficulties." (Pre-Budget Report - 27 November 2002)
"As with monetary policy, so our fiscal policy is designed to help sustain growth at every stage in the economic cycle. Our fiscal rules are set for the long term and based on deliberately cautious assumptions, including for revenues... Our commitment to meeting these fiscal rules is not just for this year and this economic cycle, but for the long term... " (Pre-Budget Report - 27 November 2002)
"I have said that our fiscal framework is designed not only so that we make the right decisions when the world economy is growing, but so that it is robust so that at all times we meet our fiscal rules. An alternative approach has been put: that, instead of our holding firm to this long-term course, this stage of the economic cycle would be the time to cut spending and borrowing. I have examined such an approach. It would lead directly to depressed demand, rising unemployment, and the old familiar boom-and-bust approach." (Pre-Budget Report - 27 November 2002)
"Looking forward, while vigilant to the global economic cycle, the challenge is to strengthen the British model for stability, and our objective must be to lock in that stability—not just for a year or two, or for an economic cycle, but for a generation." (Financial Statement - 17 March 2004)
Gordon on the fiscal rules' importance to govt's economic competence:
He described the rules as “the basis on which I think the public has seen this government as competent." (2003)
Gordon's not so psychic powers:
"There were many who opposed our decision to make the Bank of England independent, others who opposed the tough controls on borrowing and spending, and many also who opposed our new fiscal rules and disciplines. There were some in this House who predicted that our policies would bring recession." (Budget Statement - 7 March 2001)
"Those in this House who have forecast recession and those who have called our public spending plans unaffordable have been consistently wrong." (Financial Statement - 16 March 2005)
Gordon's Budgets and fiscal rules:
The number of times he has repeatedly referred to his fiscal rules in Budget Statements indicates the importance he attached to them... before they collapsed and had to be abolished.
2007 Budget - 9 mentions
2006 Budget - 16 mentions
2005 Budget - 6 mentions
2004 Budget - 19 mentions
2003 Budget - 8 mentions
2002 Budget - 8 mentions
2001 Budget - 8 mentions
2000 Budget - 10 mentions
1999 Budget - 6 mentions
My my Gordon. You really must be careful what you say in the future! Such careless talk will cost your political career!!!
Judging Brown by his own words, the death of the fiscal rules is nothing short of a total humiliation for him and signals the end to any claim Brown may still have for sound economic management and economic competence!
Hang on a minute... as George Osborne has noted, wasn't the whole point of the fiscal rules that they were designed explicitly to take account of the economic cycle?
Didn't Gordon say:
"The new ambition for our country is long-term economic strength and stability based on an unshakeable commitment to prudent monetary and fiscal rules." (Financial Statement - 17 March 1998)
"Our fiscal rules are set not for a year or even two years, but for the entire economic cycle... at all times—now and in the future—we will never compromise our commitment to meet our fiscal rules and disciplines" (Budget Statement - 17 April 2002)
"Our monetary and fiscal foundation, which is based on the independence of the Bank of England, imposes a symmetrical target for inflation, requires debt at low levels, holds to tough fiscal rules over the economic cycle and is thus designed not just for times of high growth, but for a global contraction with all its attendant difficulties." (Pre-Budget Report - 27 November 2002)
"As with monetary policy, so our fiscal policy is designed to help sustain growth at every stage in the economic cycle. Our fiscal rules are set for the long term and based on deliberately cautious assumptions, including for revenues... Our commitment to meeting these fiscal rules is not just for this year and this economic cycle, but for the long term... " (Pre-Budget Report - 27 November 2002)
"I have said that our fiscal framework is designed not only so that we make the right decisions when the world economy is growing, but so that it is robust so that at all times we meet our fiscal rules. An alternative approach has been put: that, instead of our holding firm to this long-term course, this stage of the economic cycle would be the time to cut spending and borrowing. I have examined such an approach. It would lead directly to depressed demand, rising unemployment, and the old familiar boom-and-bust approach." (Pre-Budget Report - 27 November 2002)
"Looking forward, while vigilant to the global economic cycle, the challenge is to strengthen the British model for stability, and our objective must be to lock in that stability—not just for a year or two, or for an economic cycle, but for a generation." (Financial Statement - 17 March 2004)
Gordon on the fiscal rules' importance to govt's economic competence:
He described the rules as “the basis on which I think the public has seen this government as competent." (2003)
Gordon's not so psychic powers:
"There were many who opposed our decision to make the Bank of England independent, others who opposed the tough controls on borrowing and spending, and many also who opposed our new fiscal rules and disciplines. There were some in this House who predicted that our policies would bring recession." (Budget Statement - 7 March 2001)
"Those in this House who have forecast recession and those who have called our public spending plans unaffordable have been consistently wrong." (Financial Statement - 16 March 2005)
Gordon's Budgets and fiscal rules:
The number of times he has repeatedly referred to his fiscal rules in Budget Statements indicates the importance he attached to them... before they collapsed and had to be abolished.
2007 Budget - 9 mentions
2006 Budget - 16 mentions
2005 Budget - 6 mentions
2004 Budget - 19 mentions
2003 Budget - 8 mentions
2002 Budget - 8 mentions
2001 Budget - 8 mentions
2000 Budget - 10 mentions
1999 Budget - 6 mentions
My my Gordon. You really must be careful what you say in the future! Such careless talk will cost your political career!!!
Judging Brown by his own words, the death of the fiscal rules is nothing short of a total humiliation for him and signals the end to any claim Brown may still have for sound economic management and economic competence!
No comments:
Post a Comment