Fiscal Policy Under New Labour

This paper seeks to provide an evaluation of fiscal policy under New Labour in the decade from its election in May 1997 to date. It begins with a brief review of macroeconomic performance over that period. It outlines the main features of the approach of the Labour government to fiscal policy including the golden rule of public finance, and provides a critique of that rule and the general approach to fiscal policy. It considers how far the policy rules have been observed in practice. Finally, it argues that the relative macroeconomic stability since 1997 has not resulted from the fiscal policy pursued, but rather that changes in the fiscal stance have fortuitously offset variations in private expenditure