July 15, 2020 / 3:51 PM / 25 days ago

Frequent shocks may require tighter fiscal policy, Sunak says

FILE PHOTO: Britain's Chancellor of the Exchequer Rishi Sunak speaks during a ministerial statement on the summer economic update, at the House of Commons in London, Britain July 8, 2020. UK Parliament/Jessica Taylor/Handout via REUTERS

LONDON (Reuters) - Britain may need to run tighter fiscal policy than it has in the past during good economic times due to an apparent increase in the frequency of ‘once in a generation’ economic shocks, finance minister Rishi Sunak said on Wednesday.

“This is the second ‘once in a generation’ shock we had in 10 years, and that therefore makes you think, you know, (that) what you do with public finances in ‘good’ times may need to be a bit different,” he told parliament’s Treasury Committee.

Britain’s Office for Budget Responsibility said on Tuesday that the ratio of public debt to gross domestic product was likely to rise above 100% this year for the first time in a full financial year since 1960/61 due to the hit from COVID-19.

The debt-to-GDP ratio roughly doubled to just over 80% of GDP following the 2008-09 financial crisis.

Reporting by David Milliken; Editing by William Schomberg

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