LONDON (AFX) - UK Chancellor of the Exchequer Gordon Brown refuted suggestions that he has manipulated the date at which the economic cycle ends in such a way as to meet his self-imposed fiscal rules.
In testimony to the Treasury Select Committee, Brown said it is now the Treasury's assumption that the economic cycle ends in 2006/7, two years ahead of the previous estimate, but stressed that it is not a decision.
Michael Fallon, a Conservative MP on the Committee, suggested the Treasury's new assumption was a sleight of hand so Brown can meet his golden rule of balancing the budget, excluding investment, across the economic cycle.
Last week's pre-budget report showed that the golden rule will be met with a threadbare margin of error of 8 bln stg with the 2006/7 cycle end.
A number of commentators have suggested something similar.
In fact Martin Weale, the director of the National Institute of Economic and Social Research, reckons that the economic cycle ended in 2003 and that the Brown-led Treasury is now in its second cycle.
Brown also dismissed allegations from Fallon that the Treasury has been a woeful forecaster of tax revenues, in particular those associated with North Sea oil.
Fallon noted that oil taxes this year have come in at around 10 bln stg, against the 13 bln estimated before.
Brown said the discrepancy has nothing to do with the Treasury and has come about because of maintenance issues in the North Sea as well as the the surge in the pound against the dollar. pan.pylas@afxnews.com pp/tc COPYRIGHT Copyright AFX News Limited 2006. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
© 2006 AFX News
