{{No footnotes, date=February 2021 The sustainable investment rule, as referred to in the United Kingdom, is one of several fiscal policy principles set out by the incoming Labour government in 1997.

History

These were first set out by then

Chancellor of the Exchequer The chancellor of the Exchequer, often abbreviated to chancellor, is a senior minister of the Crown within the Government of the United Kingdom, and head of His Majesty's Treasury. As one of the four Great Offices of State, the Chancellor is ...

Gordon Brown James Gordon Brown (born 20 February 1951) is a British former politician who served as Prime Minister of the United Kingdom and Leader of the Labour Party (UK), Leader of the Labour Party from 2007 to 2010. He previously served as Chance ...

in his 1997 budget speech. Subsequently they were formalised in the Finance Act 1998 and in the Code for Fiscal Stability, approved by the

House of Commons The House of Commons is the name for the elected lower house of the bicameral parliaments of the United Kingdom and Canada. In both of these countries, the Commons holds much more legislative power than the nominally upper house of parliament. ...

in December 1998. The sustainable investment rule states that public sector net debt as a proportion of

gross domestic product Gross domestic product (GDP) is a money, monetary Measurement in economics, measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjec ...

(GDP) will be held over the

economic cycle Business cycles are intervals of expansion followed by recession in economic activity. These changes have implications for the welfare of the broad population as well as for private institutions. Typically business cycles are measured by examini ...

at a stable and prudent level. The Chancellor has stated that, other things being equal, net

government debt A country's gross government debt (also called public debt, or sovereign debt) is the financial liabilities of the government sector. Changes in government debt over time reflect primarily borrowing due to past government deficits. A deficit oc ...

will be maintained below 40% of GDP over the current economic cycle. This "rule" is however merely a stated aim with no sanctions against the incumbent government if broken, unlike some balanced budget provisions used in other countries. The sustainable investment rule is the counterpart to the Golden Rule, introduced at the same time.

References

Emmerson, Carl. ''The Government's Fiscal Rules''. Institute for Fiscal Studies (2001). ASIN: B0018TWNOS

History

References

Further reading