Chancellor considering fiscal reform

Chancellor of the Exchequer Alistair Darling is considering a review of government borrowing rules, in a bid to soften the economic downturn that he expects to last “years”.

In an interview with the Times, Mr Darling did not give exact details of the fiscal reform that is being considered, simply saying: “This is routine work that has been going on at the treasury for several months.”

Government borrowing in the first quarter of the current financial year rose to £24.4 billion, the highest it has been since records began in 1946.

While he denied the country was in recession, Mr Darling said he expected the current economic downturn to last for years. He admitted it could be a factor during the next election, expected in 2010.

He also said that oil prices would stay high and that there was “bound to be more downward pressure” on the housing market.

According to the chancellor, more banks could be vulnerable to collapse. He said: “The real problem we are facing today is a consequence of the fact that too many banks at a very senior level didn’t understand the extent of the risk to which they had become exposed.”

Mr Darling indicated that there had yet to be a final decision on the subject of fiscal reform.

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