10th June 2015
George Osborne is to set out plans to ensure future governments maintain a budget surplus when the economy is growing, according to BBC News.
The chancellor initially proposed the changes to fiscal policy at the start of the year and in his annual Mansion House speech on Wednesday, he is expected to expand on his promise to limit governments to a balanced budget in “normal” times.
National debt has doubled since the financial crisis and Osborne’s proposals would prevent future governments from spending more than they receive in tax revenue when the economy is expanding.
The BBC reported that in his speech, he is expected to say: “With our national debt unsustainably high and with the uncertainty about what the world economy will throw at us in the coming years, we must now fix the roof while the sun is shining.
“In normal times, governments of the left as well as the right should run a budget surplus to bear down on debt and prepare for an uncertain future,”
Independent regulator, the Office for Budget Responsibility (OBR), would police the new rules. But the OBR is also expected to have the power to say when the government should be able spend more than it is taking in revenue, for example during a recession, claims the news report. Currently, the government is committed to balancing day-to-day spending by 2017-18.