Rachel Reeves, the British finance minister has announced that there will be changes to how the government assesses the public finances to make room for billions of pounds of extra capital spending, according to a report by the Guardian newspaper on Wednesday.
The report had cited a senior government source as alleging that Reeves would target a measure known as public sector net financial liabilities (PSNFL), to replace the current target of public sector net debt while excluding the Bank of England.
Reeves will deliver the new Labour government’s first budget on October 30, and the Guardian has said she would announce her intention to change the debt rule during a trip to the International Monetary Fund (IMF) in Washington later this week. She would however, not set out the details of the change there.
At the time of this report, the Treasury had no immediate comment on the report.
It has been widely expected of Reeves to change the debt measurement rule, but with the arrat of options for doing so, economists’ expectations of how much extra borrowing this could permit have varied widely.
The Institute for Fiscal Studies’ think tank has estimated that if the PSNFL metric had been used at a budget held in March, the then-Conservative finance minister, Jeremy Hunt, would have had an extra 53 billion pounds ($68.50 billion) to borrow without breaking the fiscal rules.
