UK needs 20-year framework for public finances, Labour says

Britain is not due to hold national elections until 2024

  
Skyscrapers in the City of London financial district are seen on a foggy morning, amid the spread of the coronavirus disease (COVID-19), London, Britain, December 7, 2020.

Skyscrapers in the City of London financial district are seen on a foggy morning, amid the spread of the coronavirus disease (COVID-19), London, Britain, December 7, 2020.

REUTERS/Toby Melville

LONDON- Britain needs a 20-year framework to ensure sustainable public finances and avoid a short-term focus for government spending, the opposition Labour Party's finance spokeswoman, Anneliese Dodds said on Wednesday.

Dodds said that if she were in government she would seek to balance day-to-day spending with tax revenue over the course of an economic cycle, with a longer term horizon for bigger issues such as climate change and care for the elderly.

"We are far too short-termist in the UK. We tend to look at budget decisions just up to the next five years. We should be looking at them in a 20-year framework," she told the BBC before a major speech she is due to deliver later on Wednesday.

Britain is not due to hold national elections until 2024 but the cost of the COVID pandemic - which is on course to lead to the highest annual borrowing since World War Two as a share of the economy - will weigh on the public finances much longer.

Unlike his Conservative predecessor George Osborne in 2010 - who regularly accused Labour of overspending - current finance minister Rishi Sunak does not appear poised to launch a multi-year squeeze on public spending.

March's budget should make clearer if Sunak wants to reverse some of the sharp rise in public debt as a share of GDP - potentially leaving more headroom in case of future crises - or simply to halt the increase.

Long-term interest rates globally are much lower than in 2010, and central banks expect them to stay there, and bodies such as the International Monetary Fund are more relaxed about high levels of debt in developed economies such as Britain.

However, British think tanks such as the Institute for Fiscal Studies and the Resolution Foundation have said higher taxes will be needed as the population ages.

Dodds did not directly address taxation in extracts of her speech made available before delivery, but called on Britain's National Audit Office to make an annual assessment of public spending with binding recommendations for government.

(Reporting by David Milliken, editing by Andy Bruce) ((david.milliken@reuters.com; +44 20 7542 5109; Reuters Messaging: david.milliken.thomsonreuters.com@reuters.net))

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