Fiscal responsibility code can't be policed

Article Abstract:

The United Kingdom chancellor, Gordon Brown, has announced a commitment to fiscal stability, but markets have not reacted favorably. Greater accountability for borrowing will not necessarily ensure that targets are adhered to. Increased spending could be due to changes in the business ccyle or to the government being imprudent. It is difficult to assess where the economy is on the business cycle and how big an output gap may be, so the government's commitment cannot be verified. This means that markets are not impressed by the commitment.

Legislative Bodies, Budget, Fiscal policy, Business cycles

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Gordon Brown's next big act

Article Abstract:

The UK Jul 1997 Budget could bring a change in advance corporation tax (ACT). The abolition of ACT could reduce stock prices and reduce the dividend income of stockholders with personal equity plans. There is a general view that taxes should be raised in order to control inflation, though some analysts argue that the Bank of England should take care of this task. Some analysts argue that the abolition of ACT could hit corporate cash flow and so reduce investment, contrary to the government's aims.

Public Finance Activities, Tax Administration, Taxation, Corporate taxes, Budget, Budgeting, Budgets, Corporations

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New Labour, old disappointment

Article Abstract:

The UK Labor party's economic policies place emphasis on investment. UK investment levels are low and it is unclear whether government intervention can improve the situation since the private sector should decide what investments are made. Companies seek high rates of return but this does not mean that they always have a short-term approach. Profit levels affect investment levels and the party does not have measures aimed specifically at boosting profits.

Labour Party (United Kingdom), Capital investments

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