Is Brown changing his fiscal rules?

Gordon Brown borrowed £2.7 billion to get himself out of a political hole over 10p tax, bringing himself perilously close to breaking the fiscal rules he created in 1997, that public borrowing should not rise to "unsustainable" levels.

It would be very embarrassing if this rule was bust. So was Brown now trying to fiddle the definition of "unsustainable" on the Today programme this morning?

Asked by John Humphrys whether pumping money into the economy had broken the rule, Brown replied "We have not broken the rule, the rule is over a economic cycle. You don’t look at each individual budget; you look at the rules over the economic cycle….." He then added "The sustainable investment rule is over the economic cycle."

Tories dispute this, with George Osborne saying this morning "When Gordon Brown was Chancellor, he said his sustainable investment rule applied every year. This morning as Prime Minister he suddenly announced it only has to be met over the course of a long economic cycle."

So who is right? According to the Fiscal Policy Treasury website: "The sustainable investment rule: public sector net debt as a proportion of GDP will be held over the economic cycle at a stable and prudent level... The Chancellor has stated that, other things equal, net debt will be maintained below 40% of GDP over the current economic cycle, in accordance with the sustainable investment rule."

So no mention of the annual target. In the latest Treasury report setting out its key Public Service Agreements, published in December 2007, it says that "to meet the target with confidence, at the end of every fiscal year of the current economic cycle, public sector net debt must be below 40 per cent of GDP." But again, this isn't quite a commitment.

Alistair Darling said in the budget speech to Parliament.  "Borrowing for investment within the fiscal rules means that we will meet our second fiscal rule the sustainable investment rule in each year and over the cycle." But this is an aspiration and prediction, based on the forecasts he went on to announce, rather than committment.

Smoke and mirrors may yet mean Gordon can wiggle out of this one....

Update: Gordon just admitted there was confusion this morning, and the rule has to be met every year.

Comments

[Mad Max]

Lets see!

Take the words 'Fiscal Rules', rearrange and what do we get:

'Fiscal Lures'

Yes! It does seem that he has changed his Fiscal Rules.