Rachel Reeves’s fiscal rules buffer should be ‘significantly larger’, say peers
Summary
A House of Lords committee says the UK Chancellor, Rachel Reeves, should keep a much larger financial buffer to manage the country’s public debt better. The committee warns that the UK’s current debt path is not sustainable and calls for more careful rules and stronger government actions to avoid financial crises.Key Facts
- Rachel Reeves increased the fiscal buffer to £22 billion, but the committee says this is still too low.
- The average fiscal buffer between 2010 and 2022 was about £30 billion.
- The UK’s public debt is on an unsustainable path according to the committee and the Office for Budget Responsibility (OBR).
- The committee urges the government to interpret debt rules more strictly, requiring debt to fall steadily rather than temporarily rise.
- Past governments have often used fiscal buffers as “war chests” and allowed them to run very low.
- The committee includes experts like former officials and economists and is chaired by Labour peer Stewart Wood.
- The report highlights risks from rising pension costs and potential problems with government debt buyers.
- The committee says the government should still pursue policies it believes are good even if the OBR does not officially support them.
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