Pre-Election Fiscal Update

This week the General Election campaign in New Zealand witnessed an eminently sensible ritual, that is completely absent from the UK. The government gave the Pre-Election Fiscal Update (Prefu) as it is required to do by law. This allows all parties to base their spending on the same fiscal outlook, which significantly restricts their ability to rely on their very own growth fairy.

Why would we not have this as a standard feature of a UK general election campaign? What’s not to like?

Incidentally, this gave a [nominal] GDP growth rate of 3.0% over the next four years, with inflation (CPI) currently at 1.7%. You have to go back to 2003 for the last time the UK had a [nominal] GDP growth rate over 3.0% (actually 3.5%), with UK inflation (CPI) at 1.4% that year.

This New Zealand election is being run against a backdrop of government surpluses. New Zealand national debt has risen since the 2008 GFC, when it stood at 5%, but it still stands at just 24% of GDP. And, New Zealand had to fund the aftermath of the 2011 Christchurch earthquake during this period. New Zealand is not relying on the next generation to bail the country out.