UK's Labour 'would strip investment out of borrowing rules'

Cornelia Mascio
Novembre 9, 2019

The Tory minister tore up his predecessor's strict budget rules in an election speech in Manchester on Thursday.

"We can't run an overdraft forever on day-to-day spending, so I can confirm that our first rule will be to have a balanced current budget". It would give him significant leeway to ramp up longer-term investment, which he only pledged would not exceed 3% of GDP.

Mr Javid said the Tories, if elected, would increase borrowing to pay for new infrastructure as he heralded new fiscal rules for a "new economic era".

He also said his party had taken four million people out of income tax altogether, with the government raising the personal tax-free allowance in recent years.

Labour's chancellor John McDonnell this day put aside out the birthday celebration's spending knowing admitting that if they recall the election they are going to expand the country's debt - but add to its sources.

If debt servicing costs rose sharply, the government would reassess its spending plans, he said.

He talked about Labour's fiscal rule for the next Parliament will exclude borrowing for funding from its borrowing targets. And a ceiling on that debt servicing fee, in normal times of 10% of tax income.

The assets of industries Labour plans to nationalise, including rail, energy, water and mail, on the government's balance sheet, according to the shadow chancellor.

Mr McDonnell confirmed Labour would commit to an "additional £150 billion" for a new Social Transformation Fund to be spent over the first five years of a Labour government.

He claimed the Conservatives "take us all for fools" with new spending plans from "the very people who have just inflicted almost a decade of harsh, brutal and unnecessary austerity cuts".

"Labour's ambitions to eradicate regional economic inequalities and upgrading our networks to decarbonise are shared by business".

If Boris Johnson is re-elected as prime minister on December 12, Javid said the government would set itself new fiscal rules allowing it to spend up to 3% of annual economic output on infrastructure, higher than a historical average of around 1.8%.

"But success will be built on more than money - businesses' main message is simple: so much more can be achieved by working with business, not against it".

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