The future of the left since 1884

A New Golden Rule: Putting the corporate sector surplus at the heart of economic decision making

The next Labour government should adopt a new fiscal rule seeking to reduce both the public sector deficit and the corporate sector surplus.


While many of the immediate – and deeper – causes of the financial crash of 2008 rested elsewhere, in the years leading up to it the UK’s economy was becoming unbalanced. The public sector deficit is one aspect of this imbalance. But it is not the only one. Much less discussed is another side of it, the corporate sector – Britain’s companies, large and small – behaving as long term savers, spending less than they earn.

Labour, along with just about everyone else, missed this shift in the behaviour of the corporate sector balance. Previously, it had been cyclical; since 2002 it has become permanent. In the future, Labour must cope with the consequences of this shift and find ways of addressing it.

In order to give the corporate sector surplus the status it requires, in this Fabian Report, Peter Kenway, Dan Corry and Steve Barwick advocate that it should explicitly appear within a new golden rule, to capture the way that reductions in the public sector deficit depend upon reduction in the corporate sector surplus.

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Peter Kenway

Dr Peter Kenway is co-founder and director of the New Policy Institute.


Dan Corry

Dan Corry is chief executive of charity think tank NPC and a former Downing Street and Treasury adviser to the Labour government. The opinions expressed in this article are the author's own.


Steve Barwick

Steve Barwick is the Deputy Director of the Smith Institute.

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