A Macroeconomic Analysis of the Main Parties’ Spending Pledges
Using our global econometric model, NiGEM, and the figures from the Conservative Costings Document and Labour’s Fiscal Plan, this briefing provides some analysis around possible macroeconomic impacts of the Labour and Conservative parties’ spending pledges, as found in their respective manifestos. In doing this it has been necessary to make some assumptions, all of which have been outlined in a dedicated section at the end of this document.
Pub. Date
24 June, 2024
Pub. Type
Authors
Key Findings:
- Labour’s tax and spending plans increase real GDP by an average of 0.1 per cent over the next five years, driven primarily through investment via their Green Prosperity Plan. The Conservatives’ tax and spending plans’ decrease real GDP by an average of 0.1 per cent.
- Although neither party would meet current fiscal targets, the Conservative plan slightly improves the public finances relative to NIESR’s baseline forecast. Labour’s initial investment in the Green Prosperity Plan slightly increases the debt-to-GDP ratio.
- Both parties’ plans would have a positive impact on business investment. Labour’s plans would boost it by 0.6 per cent on average driven by productivity gains and increased economic activity. The Conservatives’ plans would boost it by 0.5 per cent on average, driven by lower long real rates.
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