Cable unimpressed with fiscal rules

The Treasury

Tuesday, 16, Sep 2008 12:00

The government's fiscal rules system was condemned as "ridiculous" by Vince Cable at the Liberal Democrat autumn conference in Bournemouth.

The party's Treasury spokesperson said there would be "hysteria" when the government's public finances are revealed in a few weeks' time.

He suggested the 'golden rule' that public borrowing does not exceed 40 per cent of GDP will be broken, predicting the level will be "off the scale".

And he pressed the importance of ensuring the budget is balanced over the cycle – even if it is difficult to establish when this cycle actually is.

"What we think is missing is integrity. Nobody believes anything the government says last night about the budget and the deficit because it marks its own exam papers," he said.

"It's a ridiculous system. We have to have a genuinely independent body looking at the existence of the fiscal rules, commenting on them and getting an independent assessment."

Commenting on the current economic crisis gripping world markets, Mr Cable called for clearer rules on government bailouts.

"We cannot have this continuing boom and bust cycle. One solution is to regulate banks much more regularly… to stop extreme lending," he suggested.