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UK FISCAL: Guardian sources report PSNFL to be the new fiscal rule (1/2)

UK FISCAL
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  • There has been a lot of focus this morning on a Guardian piece that states that the Reeves will confirm that a new debt rule will be used to allow a large increase in capital spending (link here).
  • The piece says that Reeves will not confirm at the IMF which measure will be used, but the Guardian noted that a source had confirmed that Public Sector Net Financial Liabilities (PSNFL) would be used.
  • Note that the use of PSNFL was reported by the MNI Policy team to be a likely target in an interview with Andy King (former senior Treasury / OBR official). (See MNI INTERVIEW: UK To Ease Debt Target, Avoid Net Worth Target, 16 October).
  • PSNFL avoids the pitfalls of public sector net wealth (PSNW) which would have required valuations to be placed on infrastructure such as hospitals, schools etc. And PSNFL opens up a little less headroom than PSNW would.
  • However, the Guardian estimates that PSNFL would still have added GBP53bln to headroom if used at the last Budget.
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  • There has been a lot of focus this morning on a Guardian piece that states that the Reeves will confirm that a new debt rule will be used to allow a large increase in capital spending (link here).
  • The piece says that Reeves will not confirm at the IMF which measure will be used, but the Guardian noted that a source had confirmed that Public Sector Net Financial Liabilities (PSNFL) would be used.
  • Note that the use of PSNFL was reported by the MNI Policy team to be a likely target in an interview with Andy King (former senior Treasury / OBR official). (See MNI INTERVIEW: UK To Ease Debt Target, Avoid Net Worth Target, 16 October).
  • PSNFL avoids the pitfalls of public sector net wealth (PSNW) which would have required valuations to be placed on infrastructure such as hospitals, schools etc. And PSNFL opens up a little less headroom than PSNW would.
  • However, the Guardian estimates that PSNFL would still have added GBP53bln to headroom if used at the last Budget.