Downing Street Says » Fiscal Rules

Asked if the fiscal rules had changed, the Prime Minister’s Spokesman (PMS) said that no decisions had been taken in relation to the fiscal rules; the position remained as set out at the time of the Budget.

Asked what was being planned and if the fiscal rules would remain the same, the PMS replied that we hadn’t taken any decisions and there was nothing to add to the Treasury’s statement.

Put that it was important to clear up this unsettling matter, the PMS said that we were not responsible for what speculation appeared in newspapers; the Government’s position was as set out in the Budget.

Asked when the end of the current cycle was, the PMS said that it was set out in paragraph B45, page 153 of the Budget document.

Put repeatedly that the end of the current cycle was a good time to asses fiscal rules, the PMS repeated that there was nothing to add the Treasury’s statement; it was for the Treasury to comment on such matters. We had not taken any decisions on the fiscal rates and the position remained as set out in the Budget. We updated on fiscal policy and fiscal matters twice a year in the Budget and Pre Budget Report.

Asked if the Prime Minister was concerned about the higher than expected borrowing figures for June, the PMS said that, in relation to public finances, we were seeing global economic problems that had originated in the US and were affecting all countries. The UK was affected just as other countries were, but we started from a position where the levels of public sector debt were lower than many other major economies.

Asked if the Prime Minister was comfortable with borrowing continuing to rise, the PMS said that it was necessary to set this is in a context of overall debt levels, and according to the International Monetary Fund’s latest estimates for 2008 the UK’s net debt was at 38.9% of GDP; France’s net debt was 54.9% of GDP; Germany was at 57%; the US was at 47.9%; the Euro area average was 55.9%; Japan was 93.8% and Italy was 100%. We were starting in a position where, compared to most other comparable economies, our public finances remained, in relative terms, in a stronger position than many other countries.

Asked if the Prime Minister accepted that in the current climate tax rises would be unacceptable and therefore borrowing was a better way of alleviating the problem, the PMS said that he was not going to get drawn into a discussion about tax matters; they were matters for the Chancellor and the Treasury.

Asked if the Prime Minister was worried that the situation in the public sector was deteriorating, the PMS said that this was something that was affecting all countries, but we were starting from a position in the UK where public sector debt was lower than in many other countries.

Asked if the Prime Minister rejected the accusation that he was no longer "Mr Prudence", the PMS repeated that we were starting from a position of having a stronger position than most other comparable economies.

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» Friday, July 18, 2008

Fiscal Rules

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