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Government mulling relaxation of fiscal rules, say reports

The Government is reportedly considering relaxing its fiscal rules to avoid it breaching the principle of not borrowing more than 40 per cent of national income.

The BBC reports that the Treasury is thought to be mulling a new framework to be announced in the pre-Budget statement this autumn that would permit more Government borrowing to avoid hikes in taxation.

Prime Minister Gordon Brown introduced the “golden rule” of not borrowing more than 40 per cent of income when he became chancellor in 1997.

But the Treasury has dismissed the reports.

A Treasury spokesman says: “This story is pure speculation, based on comments that are over three months old.

“We have made consistently clear (for some time now) that we will set out the fiscal rules for the next economic cycle at the end of the current cycle.”

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