An Assessment of Fiscal Rules in the United Kingdom

The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMP policy.Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. WP/Ol/91The paper assesses the United Kingdom's golden rule and debt rule against "ideal characteristics" of fiscal rules.It concludes that they are clearly defined; transparent in institutional arrangements and measurement; adequate to ensure sustainability; and strike a good balance between flexibility and enforceability.The rules could be strengthened by clarifying the benchmark embodied in the debt rule and the modalities of the "value for money" criterion for investment.Overall, the fiscal framework establishes the necessary preconditions for a credible fiscal policy, but the credibility of the rules could be undermined by the large gap between them and actual medium-term fiscal plans.