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| Version 9 | Version 10 |
|---|---|
| Treasury may relax fiscal rules | Treasury may relax fiscal rules |
| (about 3 hours later) | |
| The government is considering re-writing its own rules on how much it can borrow in order to counter the effects of the economic slowdown. | The government is considering re-writing its own rules on how much it can borrow in order to counter the effects of the economic slowdown. |
| The new framework, which could be announced in the autumn pre-Budget statement, would permit more borrowing as an alternative to increasing taxes. | The new framework, which could be announced in the autumn pre-Budget statement, would permit more borrowing as an alternative to increasing taxes. |
| The Tories say such a move would be a final nail in the coffin of Gordon Brown's reputation for prudence. | The Tories say such a move would be a final nail in the coffin of Gordon Brown's reputation for prudence. |
| But the Treasury stressed no decision had yet been taken. | But the Treasury stressed no decision had yet been taken. |
| The BBC understands that officials are drafting a looser framework so that the Treasury would not have to break the present borrowing limit of 40% of national income. | The BBC understands that officials are drafting a looser framework so that the Treasury would not have to break the present borrowing limit of 40% of national income. |
| Tax shortfall | Tax shortfall |
| The rules were laid down by Mr Brown as chancellor after Labour came to power in 1997 - he promoted them as evidence of the prudent way he was running the economy. | The rules were laid down by Mr Brown as chancellor after Labour came to power in 1997 - he promoted them as evidence of the prudent way he was running the economy. |
| But it is predicted these will be breached as the government faces an £8bn tax revenue shortfall, because of the slowdown on the High Street, the the housing market stalling and a drop in company profits. | But it is predicted these will be breached as the government faces an £8bn tax revenue shortfall, because of the slowdown on the High Street, the the housing market stalling and a drop in company profits. |
| And the first major test, the first economic downturn that the world has faced, he has to abandon them George OsborneShadow chancellor Robert Peston analysisSend us your comments | And the first major test, the first economic downturn that the world has faced, he has to abandon them George OsborneShadow chancellor Robert Peston analysisSend us your comments |
| BBC political editor Nick Robinson said the government faced the choice of increasing taxes to make up the shortfall, drastically cutting public spending or borrowing more to make up the shortfall. | BBC political editor Nick Robinson said the government faced the choice of increasing taxes to make up the shortfall, drastically cutting public spending or borrowing more to make up the shortfall. |
| The Treasury said the news was "pure speculation, based on comments that are over three months old". | The Treasury said the news was "pure speculation, based on comments that are over three months old". |
| A spokesperson said: "We have made consistently clear [for some time now] that we will set out the fiscal rules for the next economic cycle at the end of the current cycle." | A spokesperson said: "We have made consistently clear [for some time now] that we will set out the fiscal rules for the next economic cycle at the end of the current cycle." |
| End of era | End of era |
| Shadow chancellor George Osborne said: "It's basically the end of the Brown era of economics." | Shadow chancellor George Osborne said: "It's basically the end of the Brown era of economics." |
| "He put his credibility on these fiscal rules, they were part of an arrangement he announced more than a decade ago when he was doing my job as shadow chancellor that fiscal policy would be tight, would be managed by these fiscal rules. | "He put his credibility on these fiscal rules, they were part of an arrangement he announced more than a decade ago when he was doing my job as shadow chancellor that fiscal policy would be tight, would be managed by these fiscal rules. |
| FROM THE TODAY PROGRAMME href="/1/hi/business/7513309.stm">Public borrowing at June record | |
| "And the first major test, the first economic downturn that the world has faced, he has to abandon them." | "And the first major test, the first economic downturn that the world has faced, he has to abandon them." |
| He said that if the Tories won the next election, they would inherit a "very difficult fiscal position" and he expected the government to "bequeath the next Conservative government a huge financial mess". | He said that if the Tories won the next election, they would inherit a "very difficult fiscal position" and he expected the government to "bequeath the next Conservative government a huge financial mess". |
| Liberal Democrat Treasury spokesman Vince Cable said it was unsurprising that the government was considering relaxing the rule as "we all knew they were coming up to the 40% GDP debt rule" and said it was "embarrassing, even humiliating" for the government. | Liberal Democrat Treasury spokesman Vince Cable said it was unsurprising that the government was considering relaxing the rule as "we all knew they were coming up to the 40% GDP debt rule" and said it was "embarrassing, even humiliating" for the government. |
| Robert Chote, director of the Institute for Fiscal Studies, said the government should have rethought the rules "before the point at which it looks as though you are just about to break them". | Robert Chote, director of the Institute for Fiscal Studies, said the government should have rethought the rules "before the point at which it looks as though you are just about to break them". |