Why Britain needs an Economic Responsibility Act
This briefing calls on the next government to pass an Economic Responsibility Act, which would place legally binding restraints on government’s fiscal policies. Specifically, it would: (1) cap government spending at one-third of GDP; (2) cap the budget deficit at 3% of GDP; (3) cap the national debt at 40% of GDP; (4) require that off-balance-sheet obligations were fully calculated and openly stated; and (5) allow government to borrow only to invest in capital projects, not to fund current expenditure. This briefing also recommends that new rules be introduced to limit government’s ability to raise taxes.