Fiscal policy under New Labour

The paper seeks to provide an evaluation of fiscal policy under the ‘new Labour’ in the decade from its election in May 1997 to date. It begin with a brief review of macroeconomic performance over that period. It outlines the main features of the approach of Labour to fiscal policy including the ‘golden rule’ of public finance, and provides a critique of that rule and the general approach to fiscal policy. It considers how far the policy rules have been observed in practice. Finally it argues that the relative macroeconomic stability since 1997 has not resulted from the fiscal policy pursued but rather that changes in the fiscal stance have fortuitously offset variations in private expenditure.