UK says budget scrutiny rule will only apply to measures worth at least 1% of GDP By Reuters

LONDON (Reuters) – Britain’s new government said on Thursday that its planned requirement for the country’s official budget watchdog to assess big changes to tax and spending policy would only apply to fiscal changes equivalent to at least 1% of economic output.

“A measure or combination of measures is ‘fiscally significant’ if the measure or combination of measures has a costing that is at least the pounds equivalent of one percent of gross domestic product in any financial year in the forecast period,” the government said.

On Wednesday, it said all fiscal events making “significant and permanent tax and public spending changes” would be assessed by the Office for Budget Responsibility, meeting a commitment made by the Labour Party in the run-up to an election which it won on July 4.

Former Prime Minister Liz Truss and her finance minister Kwasi Kwarteng triggered a slump in British government bond prices in 2022 when they announced big tax cuts in a “mini-budget” plan that they did not allow the OBR to assess.