Fiscal Policy Case Study

Gordon Brown’s Fiscal Management

OR

Abstract:
In the UK, the Chancellor of the Exchequer is considered the driver of the economic engine. Gordon Brown was appointed as the Chancellor in 1997 and was expected to become the longest serving in office. During his seven years in office, Brown was successful in putting an end to the 'boom' and 'bust' cycle of Britain's economy. The framework through which the government implemented fiscal policy was set out in the Code of Fiscal Stability, which became an act of law through the 1998 Finance Bill. By adhering to the two rules of the fiscal code, Brown believed that he had achieved the macroeconomic policy objectives of high employment, low inflation, growth and balance of payments/trade equilibrium.

Pedagogical Objectives:

• To discuss the changes in fiscal framework and monetary policy shaped by Brown and their consequences on Britain's economy
• To discuss the relationship between interest rate, inflation, economic growth and how these variables are influenced by monetary and fiscal policy actions.

Keywords : Gordon Brown's fiscal management, Chancellor, exchequer, treasury, British economy, budget, Kenneth Clarke, Prudence, prosperity, The Code of Fiscal Stability, Golden rule, sustainable investment rule, Fiscal Policy Case Study, Bank of England, Inflation, interest rates, unemployment rates, economic growth, Britains manufacturing base, Exports and imports, Retail price inflation, Shadow Chancellor, Taxation, Public spending, government expenditure