UK finance minister Reeves to change fiscal rules in budget

BRITAIN’S finance minister Rachel Reeves said she would change the fiscal rules in the budget, and the Financial Times said she would be seeking to fund around £20 billion (S$34.2 billion) a year of extra investment with increased borrowing.

Reeves wrote in the FT on Thursday (Oct 24) she would use the Oct 30 budget to adopt a new fiscal rule aiming to free up more investment for infrastructure.

“The investment rule, will get debt falling as a proportion of our economy,” she wrote.

“That will make space for increased investment in the fabric of our economy, and ensure we don’t see the falls in public sector investment that were planned under the last government.”

In a separate article, the FT said that, with the new fiscal rule, she would seek to fund about £20 billion a year of extra investment with increased borrowing.

Reeves has been eyeing changes to Britain’s domestic budget rules to make it easier to finance public investment, potentially by using a looser definition of public debt that allows a wider range of public assets to be offset against borrowing.

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The Guardian said Reeves planned to target a measure known as public sector net financial liabilities – which allows illiquid financial assets to count against debt – rather than the existing target of public sector net debt, excluding the Bank of England.

The yields on British government bonds rose on Thursday after the Guardian report. Gilt yields across maturities were up by around 6 basis points at 1345 GMT. REUTERS