Is the UK planning a surplus ‘straitjacket’?

The U.K. government is expected to commit to running a budget surplus under normal economic conditions, a move which has already come under attack by economists before it has even been announced.

The surplus commitment hit headlines in the U.K. ahead of its expected announcement by Chancellor of the Exchequer George Osborne at his flagship Mansion House speech Wednesday night, where he will appear alongside Governor of the Bank of England Mark Carney.

Many of the key announcements have already leaked out to the media, a frequent occurrence around this event.

For Osborne, this is his first big chance to make the most of his party’s unexpected trouncing of the opposition Labour Party in May’s general election. Without previous coalition partners the Liberal Democrats, the Conservative Chancellor can pursue more traditional policies as he aims to restore the U.K.’s budget to surplus by 2017-18. The commitment to surplus in normal economic conditions will be used to reinforce his party’s reputation for fiscal competence and its case for further spending cuts.

CNBC

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Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam