Reeves is warned her ‘dysfunctional’ policy on fiscal rules is hindering the economy
Leading think tank urges Rachel Reeves to scrap debt rules
- The Institute for Fiscal Studies (IFS) has urged Rachel Reeves to abandon her self-imposed debt and borrowing rules, labelling them "dysfunctional" and detrimental to Britain's economic stability.
- The think tank criticised the chancellor's approach, likening it to a driver focusing solely on the speedometer while neglecting crucial factors like whether the brakes are working.
- The IFS argues that Reeves's fixation on her fiscal boundaries, which include not borrowing for day-to-day spending and reducing debt as a percentage of GDP by 2029/30, undermines sustainable public finances.
- Economists warned that the current system leads to policy volatility, rushed decisions, and increased economic uncertainty, often ignoring longer-term challenges.
- The IFS proposes replacing the current framework with a broader set of economic indicators, such as "fiscal traffic lights", to ensure better-designed policies and sustainable public finances.
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