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Is the UK planning a surplus ‘straitjacket’?

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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 Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.
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