Today’s political news is being dominated by a report in the Independent, claiming that Labour will pledge to go into the next election with higher spending plans than the Conservatives.
The report gives a preview of forthcoming research from the Fabians:
Arguing the cuts may be unnecessary, the study says that, if the economy is growing by about 2 per cent annually, public spending could rise by 1 per cent a year and Labour could achieve Mr Osborne’s target of seeing debt falling by 2016-17 two years later – or sooner than 2018-19 if taxes were increased.
Leaving aside today’s likely political brouhaha* over what this analysis means for the politics of 2015, this report is an important contribution to the economics of getting an appropriate fiscal framework in place.
The political debate on whether or not parties should sign up to the Coalition spending plans beyond 2015 is currently crowding out a much more important fact – the UK no longer has a fiscal framework that is fit for purpose.