Funding the Future What's wrecking Britain?
5 snips
Oct 29, 2025 
Larry Elliott, longtime economics editor and co-author of the Green New Deal, dives into the UK's fiscal challenges. He critiques Rachel Reeves’ economic rulebook as unrealistic and the Bank of England for its inflation missteps. The conversation explores the potential of capital controls to revive manufacturing, the risk of an AI bubble, and the limited returns from recent tech advancements. Elliot also emphasizes the need for fresh political leadership and expresses cautious optimism for a transformative future.
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Fiscal Rules Are Self-Inflicted Traps
- Rachel Reeves is boxed in by fiscal rules that are essentially guesswork about four-year forecasts.
- Larry Elliott argues those rules force unnecessary tax rises and harm a weak economy.
Make Fiscal Rules Meaningful
- Replace abstract fiscal targets with meaningful, measurable social and economic goals like reducing child poverty or boosting employment.
- Design rules that track real economy variables rather than speculative four-year revenue forecasts.
Monetary Targets Miss External Shocks
- The Bank of England's narrow remit to hit a 2% inflation target is unrealistic amid global shocks.
- Elliott says inflation spikes are often exogenous, like wars affecting energy and food prices.
