A Consideration of Fiscal Targetry

ABSTRACT The UK's current fiscal rules and framework are not fit for purpose. Try as they might, the rules are more “honor'd in the breach than the observance”. They have introduced an unintended incentive on the margin (at fiscal events) to trade off government investment for government consumption. They have led to a trivialisation of the fiscal policy debate centred on arbitrary fiscal space. And taken attention away from the failures of economic policy, which on an assessment by the Office for Budget Responsibility (OBR), have significantly damaged potential output, leading to a more inflation‐prone country and one that has developed a structural fiscal deficit. A further problem has been the increasing reliance on frequent but noisy economic forecasts and this has raised the spectre of a return to fiscal fine‐tuning by governments eager to establish fiscal credibility.