Public Investment in the UK

Toigo and Woods consider the role of public investment in the UK fiscal policy framework. First, they examine the general guidelines for public investment policy: these should address both microeconomic considerations concerning efficiency and the costs and benefits of individual projects and macroeconomic considerations about the impact of the aggregate level of public investment in the short and the long term. The Authors examine the arguments supporting a specific treatment of public investment (the potential to self-finance, inter-generational fairness and the political economy issues leading to a bias against public investment) and the way this treatment can be embodied in a rule based framework. Finally, they describe the UK framework both at the macro and micro level and examine the role of Public Private Partnerships. Toigo and Woods conclude noting that the new framework has contributed to addressing the shortfall in public investment which had previously characterised the UK