A Consideration of Fiscal Targetry National Institute of Economic and Social Research

The fundamental problem in welfare maximisation is likely to be the need to trade the impact of distortionary taxes and the prospective costs of debt service against the benefits to current and future generations across the income spectrum of the fiscal interventions. [...] This will mean some way of providing assurance to bondholders that the tax base of the country will grow in the longer run to ensure that debt service costs to neither impinge on the future provision of essential public services and infrastructure and nor on the central bank’s ability to control inflation with its policy tools. [...] And are certainly of help in trying to understand what the appropriate fiscal response to current shocks may be and this seems to be absent from the current remit of the OBR. [...] The OBR, as part of the development of a credible fiscal framework, has been an excellent innovation and has produce much excellent data and analysis of the fiscal position and the British economy. [...] An overview of the government balance sheet, the changes since the previous year and how it is both sustainable in terms of the market demand for gilts but also in terms of tax revenues required in excess of the returns from any assets held, would lead to a better set of choices over time.