How to fix the fiscal rules

Fiscal rules can sound technical, but they shape some of the biggest choices in economic policy: what we spend today, what we invest for tomorrow, and how we share costs across generations.

In this episode of IFS Zooms In, Helen is joined by Ben Zaranko to unpack why governments use fiscal rules, what the UK’s current rules are designed to do, and why - despite repeated promises - debt has continued to ratchet upwards. They discuss how a narrow, pass–fail approach has encouraged a fixation on “headroom”, contributed to last-minute policy changes driven by forecast movements, and crowded out wider debate about long-run sustainability.

They then set out an alternative approach: a clearer fiscal strategy at the start of each parliament, assessed against a broader dashboard of indicators rather than a single bright-line test, using a traffic-light style system to support a more transparent and nuanced public conversation about the state of the public finances.

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