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public sector

By Alice-Xu Oct 23, 2013 812 Words

a. brief background of fiscal position of UK

Our central forecast for the next five years is that public sector net borrowing (PSNB) will decline steadily as a share of national income from the post-war peak it reached in 2009-10, but more slowly than we forecast in November. As a share of national income, Government revenues are projected to increase up to 2013-14 and then flatten out. Spending on public services and social security is expected to fall, partly offset by increases in spending on debt interest and net public sector pensions.

The Coalition Government inherited one of the most challenging fiscal positions in the world. From 2001 onwards, public spending grew steadily as a share of the economy and a structural deficit began to emerge. According to the OECD, by 2007 the UK had the largest structural deficit of any G7 economy. As tax receipts fell away, the persistent gap between spending and revenue widened and public spending had risen to around 47½ per cent of GDP by 2009-10. With the largest budget deficit in the UK’s peacetime history, reducing the deficit is one of the Government’s most urgent priorities.

UK's fiscal position is 'unsustainable'

relationships between executive(HM treasury) and legislature in relation to the budgeting process(budgeting laws) 英国议会由上院(贵族院)、下院(贫民院)、国王共同组成的英国议会,行使国家的最高立法权。英国议会创建于13世纪,迄今已有700多年的历史,被称为"议会之母"。上院由王室后裔、世袭贵族、新封贵族、上诉法院法官、教会大主教和主教组成,共669名议员[i],无任期限制。上院的立法职权主要是:提出法案;在立法程序中可以拖延法案生效;审判弹劾案;行使国家最高司法权。下院议员由普选产生,共659名议员,任期5年。下院的立法职权主要是:提出重要法案;先行讨论、通过法案;提出质询;财政法案只能由下院提出和通过。国王被看成是"一切权力的源泉","国家的化身",在政治生活中处于"临朝而不理政"、"统而不治"的地位,具有国家的象征意义。在立法职权方面,国王批准并颁布法律;制定文官管理法规;颁布枢密院令和特许状;召集、中止议会会议;解散议会;任免重要官员。但是,国王的这些权力主要是象征性的,行使这些权力主要还是一种形式。例如,国王批准法律,必须先经由议会通过,国王只是履行一下手续;国王解散议会,但必须根据首相的决议才能采取行动。 The Budget is the major financial and economic report made each year by the Chancellor of the Exchequer.

Chancellors use the Budget statement to update Parliament and the nation on the state of the economy, on the public finances and on progress against the Government's economic objectives.

They can review and change tax rates, and can make announcements on how taxpayers' money will be spent in the coming years.

The Treasurer was responsible for superintending every department while the Chancellor acted as a check upon the accounts of the Treasurer. Consultations & legislation
House of Commons

Draft Bills
Draft Bills are Bills issued for consultation before being formally introduced to Parliament.

The Budget

To tackle these problems requires tough choices. Since May 2010, the Government has taken decisive action to start to address these issues. The immediate priority was to restore economic stability. This is an essential precondition for sustainable economic growth, because businesses will not invest unless they have confidence that long-term interest rates will remain stable, and that finance will be available, on reasonable terms, when they need it. In the June Budget 2010, the Government set out a credible plan to tackle the fiscal deficit and restore debt as a percentage of GDP to a sustainable downward path.13 The Spending Review in October 2010 set out a detailed programme to deliver this and initiated a major programme of reforms of the school, university, welfare and pension systems to make them fit for the demands of the future.14 The IMF has supported the Government’s action, stating that action is “essential” to ensure debt sustainability and that:

“The consolidation plan and implementation of early measures to tackle the deficit – one of the highest in the world in 2010 – greatly reduces the risk of a costly loss of confidence in fiscal sustainability and will help rebalance the economy.

Discretionary Spending Caps & the EDX Committee p.13


The first rule is described as the golden rule: Over an
economic cycle—the length of which is determined by the Chancellor—the government will borrow only to finance public investment, not for public consumption. In essence, the government can borrow in order build schools, hospitals, and other capital projects that would increase the assets of the government, but it will not borrow in order to fund pay increases for unions and civil servants or to make social security payments. 4

second of Brown’s fiscal rules was the sustainable investment rule, which mandates that over the economic cycle the ratio of net public debt to GDP will be less than 40%. 5

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