Economy and public finances: Key issues for the 2015 Parliament

This section of the Key Issues 2015 publication focuses on the economy and public finances. This briefing was prepared by House of Commons Library researchers for Members of the new Parliament in 2015 and includes analysis of a range of subjects.

 

Interest rates and inflation – the only way is up?

Following the worst financial crisis in a century and the longest downturn on record, the Bank of England cut its official interest rate (known as the Bank Rate) to 0.5% in March 2009, the lowest level in its 320-year history.

Regulating banks– have we learned the lessons of 2008?

In the UK, a new regulatory framework has been created for banks. In April 2013, the Financial Services Authority was abolished and responsibility was passed to the Prudential Regulation Authority

Productivity and living standards: scarred for life?

Historically, productivity in the UK has grown at around 2% per year, but in the seven years since the recession began, it has stagnated. The Office for National Statistics says this is “unprecedented in the post-war period”.

The budget deficit – the best laid plans…

The major parties fought the 2015 General Election with fiscal policies more different than at any other election since 1992. But they have all pledged to return the public finances to balance.

The other deficit – the UK’s current account

During the last Parliament, the budget deficit captured much political and media attention. But recently another deficit – the current account deficit – has competed for the spotlight.

Reducing public spending

Each of the parties has its own plans that imply considerably different reductions in day-to-day spending; but they all require at least some cuts that, if followed through.

The end of local government as we know it?

Local authorities saw substantial reductions in their funding in the last Parliament; and it seems unlikely that budgetary pressures will ease in this one. The degree of change has led to numerous proposals for reform.

Is there a future for corporation tax?

The previous Government’s reforms to corporation tax were among the most significant of the tax changes that it made in the last Parliament. However, public concerns over avoidance etc pose serious questions about the future of corporation tax.

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The Key Issues articles were published in May 2015. However, the Commons Library produces new briefings as topics evolve.

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