Todays budget

[albie]

No, I am not confusing the two.

I am saying that whatever rule is adopted is a product of political considerations, and is NOT an iron rule of economics.
There may be reasons to use FR at a particular time, but they are not a generic to be applied above other criteria.

The particular political choice made serves as cover for the administration who makes it, that is the main goal.

The nuances of this are set out here;
https://mainlymacro.blogspot.com/2024/02/one-rule-to-bring-them-all-and-in.html

Please see footnote 1.
Reeves is applying a rule to borrowing as a result of ruling out wealth taxation.
This is completely the wrong way round.

[BillyStubbsTears]

Belton.

Blair was astonishingly fortunate. He took over at the perfect time for an Opposition leader.

The Govt was incompetent, riven with infighting and full of crooks. The country had had enough of them.

But.

The economy was being sensibly managed by Clarke, after a decade of mad experimentation with monetarism and pro-cyclical fiscal policy had run us from recession to unsustainable boomto recession again.

The Tories were never going to win in 97. But they'd done the heavy lifting of getting the economy more or less in shape under Clarke.

Blair could cruise to power in 97 to the tune of "Things can only get better" because things WERE going to get better. Not through any massive policy change, not at first anyway. We were at the start of the post Cold War era of Great Moderation, where most countries had sustained growth and minimal inflation and the peace dividend to spend on public services. Blair was the ideal front of house man with his cheesy smile and his bright eyes.

Things could only get better. Capitalism was working. The existential threat of the Cold War had gone. Optimism was the game.


Fast forward 27 years and the scene is totally different.

The economy has been shockingly mismanaged for over a decade. The current Chancellor is engaging in scorched earth policies, giving away tax cuts that no-one believes are feasible.

There's a growing threat to the whole of European peace, and we are going to have to spend far more on defence.

There's social division at home due to Brexit and the Culture War.

Optimism? Yeah I'm optimistic that we can do better than we have done. But also realistic that the next decade is going to be f**king hard work, and possibly the most dangerous in half a century.

Anyone coming in saying we just need a to have belief and be happy would be a f**king idiot in the current circumstances. It's time for sober hard work, and jam tomorrow.

[River Don]

Unfortunately I don't think hard work will cut it.

Not when house prices are 8x the average wage. That situation is likely to get worse when interest rates fall back and house prices take off again.

For most young people today, no matter how hard you work, you ain't going to be able to afford a home.

The only way will be to inherit and that doesn't work for many.

[belton rover]

Belton.

Blair was astonishingly fortunate. He took over at the perfect time for an Opposition leader.

The Govt was incompetent, riven with infighting and full of crooks. The country had had enough of them.

But.

The economy was being sensibly managed by Clarke, after a decade of mad experimentation with monetarism and pro-cyclical fiscal policy had run us from recession to unsustainable boomto recession again.

The Tories were never going to win in 97. But they'd done the heavy lifting of getting the economy more or less in shape under Clarke.

Blair could cruise to power in 97 to the tune of "Things can only get better" because things WERE going to get better. Not through any massive policy change, not at first anyway. We were at the start of the post Cold War era of Great Moderation, where most countries had sustained growth and minimal inflation and the peace dividend to spend on public services. Blair was the ideal front of house man with his cheesy smile and his bright eyes.

Things could only get better. Capitalism was working. The existential threat of the Cold War had gone. Optimism was the game.


Fast forward 27 years and the scene is totally different.

The economy has been shockingly mismanaged for over a decade. The current Chancellor is engaging in scorched earth policies, giving away tax cuts that no-one believes are feasible.

There's a growing threat to the whole of European peace, and we are going to have to spend far more on defence.

There's social division at home due to Brexit and the Culture War.

Optimism? Yeah I'm optimistic that we can do better than we have done. But also realistic that the next decade is going to be f**king hard work, and possibly the most dangerous in half a century.

Anyone coming in saying we just need a to have belief and be happy would be a f**king idiot in the current circumstances. It's time for sober hard work, and jam tomorrow.

Those are very good points.
But for a PM to lead the country through the incredibly difficult times you say we have ahead of us, they need to connect with the country. They need the country (or even just Labour voters like me) to believe they can do it.
I’m not suggesting optimism is all we need, I just want to have someone running the country  who I believe has what it takes to deliver. I just don’t see that in Starmer.

[Bristol Red Rover]

BFYP.

Like I keep saying, Oppositions don't win elections. Governments lose them.

You'll be too young to remember, but Blair came to power in a landslide, saying very little about what he wanted to do, and explicitly sticking to the Tories' spending plans.

Thatcher never campaigned in 79 on the policy of having 15% interest rates to crush inflation, which would put 4 million out of work. She won because Labour had lost control in the Winter of Discontent.

So what do you think Starmer will do? I can't believe he'd do anything except toughen up on police powers for Denis, send more aid to Israel and reduce taxes on hair gel.

[SydneyRover]

Here you go Syd, from the IFS.
This article explains why the use of fiscal rules is a convenient camouflage option for politicians.
https://ifs.org.uk/articles/gaming-fiscal-rules-no-way-make-budget-policy

Surprised you missed this when reading your Guardian, Syd;
https://www.theguardian.com/commentisfree/2024/mar/04/the-guardian-view-on-treasury-fiscal-rules-no-way-to-run-a-country

A good explainer of the Hunt budget here;
https://leftfootforward.org/2024/03/why-jeremy-hunts-budget-fails-britain/

I hope this helps!

Not at all Albie I'm waiting for you to produce evidence of what you said in your comment that:

''Fiscal rules were a New Labour invention from 1997, designed to provide a camoflage cover for political ends''

''These rules are revised on a regular basis, once it becomes clear they will not deliver the stated objectives''

If you read the article I posted there is a graph thingy that shows how inflation adhered to targets right up to the gfc, which GB handled quite well according to the rest of the world.

[drfchound]

Here you go Syd, from the IFS.
This article explains why the use of fiscal rules is a convenient camouflage option for politicians.
https://ifs.org.uk/articles/gaming-fiscal-rules-no-way-make-budget-policy

Surprised you missed this when reading your Guardian, Syd;
https://www.theguardian.com/commentisfree/2024/mar/04/the-guardian-view-on-treasury-fiscal-rules-no-way-to-run-a-country

A good explainer of the Hunt budget here;
https://leftfootforward.org/2024/03/why-jeremy-hunts-budget-fails-britain/

I hope this helps!

Not at all Albie I'm waiting for you to produce evidence of what you said in your comment that:

''Fiscal rules were a New Labour invention from 1997, designed to provide a camoflage cover for political ends''

''These rules are revised on a regular basis, once it becomes clear they will not deliver the stated objectives''

If you read the article I posted there is a graph thingy that shows how inflation adhered to targets right up to the gfc, which GB handled quite well according to the rest of the world.

Syd, to help you out (with something you could easily have found for yourself):
From the Institute  for Government website:

What fiscal rules have UK governments adopted?
The first fiscal rules in the UK were adopted by the New Labour government in 1997. Those rules applied for over a decade, but since then the UK’s rules have changed more regularly. The current iteration of fiscal rules (set in November 2022) is the ninth set the UK has had. These nine sets of rules between them comprised 26 different rules in total, summarised in the table below.

What fiscal rules have UK governments adopted?
The first fiscal rules in the UK were adopted by the New Labour government in 1997. Those rules applied for over a decade, but since then the UK’s rules have changed more regularly. The current iteration of fiscal rules (set in November 2022) is the ninth set the UK has had. These nine sets of rules between them comprised 26 different rules in total.

[big fat yorkshire pudding]

BFYP.

Like I keep saying, Oppositions don't win elections. Governments lose them.

You'll be too young to remember, but Blair came to power in a landslide, saying very little about what he wanted to do, and explicitly sticking to the Tories' spending plans.

Thatcher never campaigned in 79 on the policy of having 15% interest rates to crush inflation, which would put 4 million out of work. She won because Labour had lost control in the Winter of Discontent.

Doesn't make it right and it's a fair question to ask.  I'm sure we'll get more of a general sense of direction than we've got now in the coming months.

[BillyStubbsTears]

Like I've said BFYP, the detail of macroeconomic policy are too much to deal with in an election campaign.

When given the choice between trying to understand the Paradox of Thrift, or just being told we've spent more than we can afford, which one are voters going to plump for?

That's not right either, but it has happened regularly in recent elections.