IN THE RUN UP to George Osborne’s budget announcement on Wednesday (Mar 16) Plaid Cymru urged the Chancellor to abandon his fiscal mandate, branding it ‘irresponsible and ideological’.
Plaid Cymru has attacked the Chancellor for putting politics and ideology before the UK’s economy by placing a damaging and unnecessary duty on government to achieve a budget surplus by 2019/20.
Local Member of Parliament and Plaid Cymru’s Treasury spokesperson, Jonathan Edwards MP, highlighted that the UK has only had a budget surplus eight times in the last 60 years and has not had more than three years of consecutive budget surpluses since 1952, but will now be required to do so every year from 2019/20 onwards thanks to the Tory fiscal mandate, which was supported by Labour.
The Institute of Fiscal Studies (IFS) has also criticised the fiscal mandate, suggesting it could lead politicians to inappropriately favour policies that temporarily flatter headline measures of the public finances.
It warned that small forecasting changes could require sudden in-year tax rises or spending cuts to ensure the mandate is met, and suggested that previous experience shows that there will be a one-infour chance of this being necessary.
Plaid Cymru’s Treasury Spokesperson, Jonathan Edwards MP said: “The Chancellor is putting politics before economics by placing the UK under a time-limit based on nothing more than the political calendar. The Tory fiscal mandate, which, incomprehensibly, was supported by Labour, boxes the Chancellor in and takes away vital fiscal levers which are desperately needed in our economy.
“The Government and the central bank are out of monetary ammunition. Despite interest rates remaining at an all-time low, the Chancellor has utterly failed to get to grips with the budget deficit. He needs to turn to fiscal policy – to investment in our economy – but his irresponsible and ideological fiscal mandate prevents him from doing so.
“Plaid Cymru is backed by the OECD, the IMF and the CBI in calling for the Chancellor to invest in infrastructure. A modest increase in infrastructure investment of 1% of GDP would be a £20 billion boost to the economy, with £1 billion coming to Wales.
“The Chancellor is starving our economy of vital investment and he should listen to the IFS and announce on Wednesday that he will abandon this irresponsible and damaging block on economic growth.”
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