UK Chancellor Focuses on Reform Measures to Curb Fiscal Volatility

ChainCatcher reports, citing Jintou and the Financial Times, that as concerns grow among investors over the volatility of the UK's economic policies, UK Chancellor Reeves is considering reforms to the country's budgetary system to prevent the recurrence of sudden spring fiscal patch-up plans.

According to sources familiar with the matter, Reeves is considering reform proposals put forward by the International Monetary Fund, which aim to "reduce the pressure for frequent fiscal policy adjustments." At the same time, she has reiterated her commitment to holding only one fiscal statement per year. In May of this year, the IMF recommended that the UK implement reforms to ensure that minor deviations from fiscal rules do not require "corrective fiscal measures" between two budgets. The organization also suggested that the UK could consider assessing compliance with fiscal rules only once a year, instead of the current twice a year.

A City of London insider commented, "This is something the Treasury is considering—it has to be done. Swinging back and forth between forecasts every six months is simply not a viable way to set fiscal policy in today's highly unstable global economic environment. The bond market would not only have no objection to such reforms, but would actually welcome them."