UK chancellor Rachel Reeves has said that she will revise the country’s debt rules in an effort to boost infrastructure spending. Reeves said that adjustments were needed in the way the country measures debt in order to fund further investment, stating that the new rules would help “us to grow our economy and bring jobs and growth to Britain”. The changes will allow for up to £50bn of additional investment, but are not expected to be fully allocated until the Budget is published. The government remains committed to reducing debt as a share of the economy within the nextfive years.
Reeves also attacked the previous administration, stating that it had pursued “the path of decline”, which would have seen a fall in government investment from 2.6% of economic share in 2018 to 1.7% by 2028-29 if allowed to continue. “We need to invest more to grow our economy and seize the huge opportunities there are in digital, in tech, in life sciences, in clean energy, but we’ll only be able to do that if we change the way that we measure debt,” said Reeves.
Reeves added that the revisions had the support of several leading economists, including Andrew Haldane of the Bank of England, former Conservative Minister Jim O’Neill and the governor of the Bank of England, Mark Carney. On Monday, first deputy managing director of the International Monetary Fund (IMF), Gita Gopinath, also called for greater UK investment pending guarantees of future stability.
The changes will not allow for additional day-to-day expenditures or reduce planned Budget tax rises, but will improve investment opportunities in digital technologies, life sciences and clean energy. The Chancellor also said she plans to confirm tighter rules regarding spending on welfare, governmental departments and debt interest. The Conservatives have complained that before the last election, Reeves had pledged not to “fiddle” with fiscal rules
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