The wrong type of slowdown
, Friday, 18 July 2008
The breaking news this morning that seems to have leaked to several major newspapers was that the Chancellor, Alistair Darling, is about to announce that he will be breaking the strict fiscal rules laid down in his predecessor’s term of office. The UK public finances, which are due to be released at 09.30 this morning, will now take on much more significance. The projected shortfall in government financing in 2009-2010 means that the Chancellor will have to break his rule regarding public sector debt, which up until now should not rise above 40 per cent of national income. The UK has long been held up as a model for fiscal prudence, indeed, many European countries have tried to emulate the open economy that Gordon Brown had built. Now, this economy appears to be taking a turn for the worse.
