Fiscal policy· Macroeconomic policy Britannia waives the rules? Lessons from UK and international experience with fiscal rules 21 October 2019 Richard Hughes Cara Pacitti Jack Leslie Fiscal rules are popular: every government in the UK since 1997 has had them and, today, around half of all countries do too. The UK’s current fiscal rules will expire in 2020-21 and all major political parties have committed to replacing them. This paper explores what lessons we can draw from UK and international experience to help set the UK’s next generation of fiscal targets. The UK has had a mixed experience of fiscal rules since pioneering them in the late 1990s. Some of the strengths of the UK’s approach have been the coverage of the entire public sector, the use of established statistical definitions, clear targets, a medium term outlook, and a supportive institutional framework. But persistent weaknesses remain, including the disregard for the value of public sector assets, reliance on rules which are too backward or forward looking, setting aside too little headroom to cope with forecast errors and economic shocks, and spending too little time building a broad social consensus for the rules. This paper, the second in a series from RF’s Macroeconomic Policy Unit, provides vital context and important lessons which policy makers and politicians can draw on when designing the UK’s next set of fiscal rules.