Fiscal policy 'needs a rethink', says business group

20 Feb 2026

According to the IFS, the UK's fiscal debate has become 'completely fixated' on the amount of headroom against fiscal rules, which contributes to a 'dysfunctional' policymaking process.

The business group believes that the UK would be better served by a new framework based on a set of fiscal 'traffic lights', which would be utilised to monitor performance against high-level fiscal objectives and principles set out in a Statement of Fiscal Strategy.

Ben Zaranko, Associate Director at the IFS, commented: 'Moving to a broader set of fiscal indicators, assessed according to a traffic light system, would provide a better picture of the government's overall fiscal position and reduce the incentive for governments to contort policy in pursuit of a particular 'headroom' number.'