Chancellor Sajid Javid has confirmed a Conservative government would deploy new fiscal rules to create a “decade of renewal”.
Speaking from Labour safe seat Wythenshaw Javid said the 2020s would be “Britain’s best decade yet”, and confirmed the introduction of new fiscal rules, so that the government can borrow without being irresponsible.
The first rule would be to have a balanced current budget, telling journalists and supporters: “What we spend must not exceed what we bring in”
Javid’s first Budget, which he will bring forward in the new year after the election prevented one this autumn, will set out the detail for plans “to level-up the entire UK”, including extra cash for new schools and hospitals, roads, railways and better broadband.
“We will borrow some more to invest, but we know all too well what happens if debt gets out of control,” he said.
He says the second rule is that the government will only borrow to invest. That means investment will not exceed three per cent of GDP under the Tories, Javid confirmed. The average in the past has been 1.8 per cent, and “so this is a big increase”, the chancellor said.
His third new rule would be that, if debt interest starts to rise significantly, the borrowing limit will be reviewed.
In recent weeks the Treasury has been under pressure to prove the government was not poised to break its own fiscal rules. On current forecasts, economists believe there is no chance the government will meet its commitment to keep borrowing below two per cent of national income in 2020-21 or to balance the budget in the medium term.
Javid added:“It’s easy to poke fun at Comrade Corbyn and his fantasy economics, but this is a close election and I am taking nothing for granted.
“Jeremy Corbyn and John McDonnell are like the anti-vaxxers of economic policy. Not only did they reject the treatment needed to heal our economy and get the deficit down by four-fifths, they now want to take every step imaginable to make the country sick and unhealthy again.”
During a subsequent Q&A, Sajid Javid stressed the difference between the two parties’ approaches was “the difference between night and day”. He also questioned if Labour will have fiscal rules, adding: “If they do, they will not meet them.”
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