Abstract Malaysia is a rapidly ageing country. Relative to the United Kingdom, its social protection systems are underdeveloped. What is more, its political structure and social practices are different from those of the United Kingdom. Accordingly, the political economy of ageing seems to suggest a stark contrast when the two countries are considered alongside one another. Nevertheless, when programmes concerning income for the retired and the provision of care services for the frail elderly are considered, there are more similarities than might have been expected. Both countries face problems with inadequate pension coverage, and the paper considers how more of the self-employed might be brought into savings plans. In both countries, there is debate on whether pension savings should be directed towards investments in the domestic economy. Both countries face a rapid increase in the number of the ‘oldest old’—those most likely to need support, and policymakers are asking themselves how provision for these people should be improved. This article points out how fiscal constraints have led policymakers in the United Kingdom as well as in Malaysia to encourage the family to increase the part they can play. But in both countries, family members, especially women, are no longer willing, or even able, to carry out ‘traditional’ roles. There are lessons to be learnt in both directions. Moreover, in both countries, more attention should be devoted to understanding and explaining the economic and societal consequences of demographic change.
Projections of health/social care spending highlight risks to future fiscal sustainability. This concern is based, in part, on six assumptions, which we argue are uncertain: (1). Populations will continue to age; (2). Health is a function of age; (3). Health/social care need is driven by health; (4). Health/social care spending is driven by need; (5). Inequalities are unimportant; (6). Increasing dependency ratios risk fiscal sustainability. We propose three hypotheses which reframe the debate: (1). Health/social care spending primarily results from political decisions on supply; (2). Prevention policies alone are unlikely to reduce fiscal pressures; (3). Fiscal sustainability is best achieved by combining prevention with decommodification and 'realistic medicine'.
We present simulation results of the macroeconomic effects of a green European Union (EU) public investment fund for the euro area using the macroeconometric simulation model National Institute Global Econometric Model. Our results show considerable negative gross domestic product (GDP) effects together with inflationary effects from CO2 taxation alone. Accounting for climate change and the corresponding long-term damage to GDP, however, our results show that not acting on climate change now causes far more severe damages in the future. An EU investment fund would significantly cushion the negative transitory GDP effects. Finally, our results highlight the importance of cooperation such that climate change policies are implemented on a global level.
The 2025 Budget exemplified the dysfunction in the UK's Budget process, with systematic and selective briefing of underlying forecast details-meant to be private between the Office for Budget Responsibility and the Treasury-to the media since the 2022 'mini-budget' crisis. In all documented occasions, this has come from the Treasury, with the OBR remaining silent allowing the Treasury to bed in a narrative based on partial information, with real costs in terms of prolonged uncertainty and market volatility. This article proposes a relatively narrow reform to the process that would see the OBR 'bookend' the Budget. The OBR would publish its pre-measures forecast three weeks before a fiscal statement-the same timing as it currently delivers it internally to the Treasury. The Treasury would then respond with its policy measures on Budget Day, with an OBR assessment following some days or a couple of weeks later. Key benefits of this reform are: increased transparency and democratic accountability; removing the OBR from politically contentious judgements about second-round effects of policies before they are announced and under pressure from the Treasury to hit particular fiscal rule targets; reducing the window for market uncertainty by providing a published baseline; and restricting speculation after OBR publication to policy decisions. This would be achieved while minimising the impact on the established forecast timetable. This design, adopting established practice from the Netherlands in publishing the pre-measures forecast to the UK's institutional setup, can help guard the OBR's independence while reducing the window for market volatility.
Public investment in the United Kingdom has been persistently low compared to both its post-war levels and other OECD countries, and this shortfall has been widely seen as one of the causes of weak UK productivity growth since the global financial crisis. Although the Labour government elected in 2024 prioritised growth via higher public and private investment, its self-imposed fiscal rules have limited public investment, sparking debate and research on the UK fiscal framework. This Special Issue brings together recent research examining fiscal frameworks and includes contributions from academic and policy-oriented researchers and leading experts on this issue.
This essay explores the affinities between Vincenzo Gioberti's Del primato morale e civile degli italiani (1843) and the constitutional political economy advanced by Adrian Pabst and Roberto Scazzieri in The Constitution of Political Economy: Polity, Society and the Commonweal (2023). Gioberti argued that Italy's political regeneration required a prior renewal of its moral and civil order, insisting that institutions cannot be legitimate or enduring unless grounded in dispositions, associations and collective vocation. Pabst and Scazzieri similarly reject contractarian and institutionalist accounts of political economy, proposing instead that polity and economy are constituted by interdependencies, proportionality, systemic interests and dispositions. By placing these works in dialogue, the essay highlights convergences in their conception of politics as constitution rather than contract, their emphasis on civil association, their recognition of structural embeddedness and their understanding of persistence and transformation as mutually dependent. At the same time, important divergences are acknowledged: Gioberti's teleological nationalism and reliance on providential history contrast with the pluralism and secular structural analysis of Pabst and Scazzieri. The comparison suggests that constitutional political economy is best understood as both structural and civil: grounded in coherence, viability and proportionality, but equally dependent on dispositions and collective imagination. In contemporary Europe, where crises of legitimacy, inequality and ecological sustainability prevail, such a civil-structural vision of political economy offers a timely, critical resource for re-thinking the commonweal.
This article explores the macroeconomic consequences of a sharp US dollar depreciation against the backdrop of high US policy uncertainty, fiscal imbalances and growing geopolitical fragmentation. Using the NiGEM global macroeconomic model, we simulate three scenarios: (1) a combined shock to currency and investment risk premia; (2) a broad-based currency risk premium shock and (3) a currency risk premium shock specifically benefiting the euro. The first scenario results in a global slowdown, with pronounced effects on the US economy. In contrast, the latter two scenarios suggest potential gains for the Euro Area, conditional on the euro's enhanced international role. Realising such gains would require measures to increase the supply and liquidity of Euro Area safe assets. The analysis also highlights risks beyond the model's scope, including the potential for a financial crisis triggered by a sudden loss of confidence in the US dollar.
Over the past 5 years, the policy constraint posed by the sovereign bond market has strengthened. Across the G7, governments have been forced into rapid policy reversals, often due to sharp and unexpected rises in bond yields. The fact that the bond market acts as a constraint on policy-particularly on long-term investment-is well known. What has become apparent is that this market constraint has sharpened and now shapes G7 policymaking outside periods of acute crisis. This paper examines the bond market constraint, and how it has evolved in recent years. The past 5 years have seen a striking evolution, with record levels of G7 debt issued. Focusing on the United States and the United Kingdom, we outline two key empirical puzzles: first, for both, bond yields appear higher than justified by benchmark models; second, in the United Kingdom, yields have become highly (and surprisingly) volatile. We then review candidate explanations for these changes. We posit and examine new forces-demographic shocks, news coverage of fiscal watchdogs, the role of hedge funds and stablecoins. Finally, we use a simple econometric framework to provide a first test of whether these forces may explain bond yields. We find indicative evidence that they do. However, much remains unexplained, suggesting the importance of further work to understand the implications of the higher debt costs across the G7. As part of this analysis, we introduce a new dataset of fiscal watchdog media salience and publication patterns, which we make available to support future research.
There is much discussion about the inability of political systems in democratic countries to deal with a range of problems, aspects of which all to some extent relate to the current evolution of global economic growth and its environmental consequences. The paper explores some long-term underlying causes of the inability of national political systems to adapt to global markets in trade and labour. This is primarily because of how the nation state developed over the long term as a means of providing employment and basic necessities to its subjects and citizens.
This paper argues that the current UK fiscal framework fails to support growth-enhancing public investment while inadequately restraining debt accumulation. Frequent changes to fiscal rules, their short horizon and incentives that prioritise current spending over long-term investment have undermined economic stability and productivity growth. We propose a reformed framework centred on clear fiscal objectives, enhanced OBR analysis of long-run sustainability and a target for the primary surplus consistent with maintaining stable debt. A supplementary investment rule would ensure adequate public capital formation. Together, these reforms aim to raise productivity, support resilience and improve living standards.
Policy is often seen as the synthesis of economic and political interests of the most influential players operating in material economic structures such as industrial sectors and markets. However, this is not always the case as the formation of policies often depends only partially on the inputs from economic structures, while greater influence is exercised by the internal logics of policy processes and by shared beliefs among policymakers and the society. This paper explores this issue through a comparison of the UK and US liberalisation policies of the natural gas sector.
Drawing on the New Economics of Labour Migration and debt overhang theories, this study investigates the joint impact of remittances and external debt on CO2 emissions in India, Pakistan, Bangladesh and Sri Lanka from 1991 to 2023. Using balanced panel data and multi-stage estimation techniques-including pooled OLS, Driscoll-Kraay standard errors and Feasible GLS-the study finds that remittance inflows consistently reduce emissions, likely by enabling cleaner household investments. In contrast, both external debt stock and debt servicing increase emissions, suggesting that debt burdens may crowd out environmentally friendly public spending. Notably, the interaction between debt stock and servicing shows a mitigating effect, while heavy debt servicing diminishes the environmental benefits of remittances. Additionally, urbanization and financial development contribute to higher emissions. These findings highlight the need for integrated policies that direct remittances towards green investments and incorporate environmental conditions into debt-servicing frameworks, helping South Asian countries pursue more sustainable development paths.
The liberal order, as first articulated by Hobbes, depends upon an unnatural disembedding of both the economy and the polity from society. The economic and the political are keep apart. While the economy is seen as a private matter, the polity is conceived as a public one. The socially relational and mediating groups are squeezed out. Yet this involves contradiction. Is property primarily a matter of primary seizure or legal underwriting? Either the economic captures the political or vice-versa. A bad corporatism follows. The only alternative is a good corporatism recognising the priority of the social, of groups and their representation.
The design of subnational fiscal frameworks shapes how tax and spending choices affect fiscal sustainability. Using Scotland as a case, we show that its fiscal health depends crucially on how the UK Government manages its own sustainability. National and subnational fiscal sustainability are interconnected. Differences in factors like demographics and health between Scotland and the UK also influence fiscal outcomes. These dynamics must inform any debate on reforming the UK's fiscal frameworks, especially if further devolution-including to English regions-is pursued.
Using the Irish experience of public investment and fiscal policy management over the last 25 years, we identify five core lessons. These concern (1) the need for sustained investment effort even when facing tough choices regarding public expenditure, (2) the importance of assessing the adequacy of public capital, (3) counter-cyclicality as an important principle of public investment, (4) crowding-in private investment and (5) the challenge for public investment caused by longer-term challenges such as the necessary climate transition. We also propose two overarching design suggestions for fiscal policy and investment management frameworks.
Fiscal rules for devolved nations present some fundamental challenges not faced when making national fiscal Rules. Most importantly, rules across devolved nations involve a negotiation between the central and devolved governments who have very different objectives and so the framework created ends up as a mix of economics, politics and the vagaries of compromise. This article highlights how these issues have resulted in Scotland finances being heavily influenced by both inflation and population growth in ways that were never intended to become a long run feature of the funding framework.
The UK fiscal framework, especially the fiscal rules in place, has faced widespread criticism. Since the current system was introduced, the UK's fiscal arithmetic has worsened. The article examines practices in other countries and, going beyond rules, looks at other dimensions of their fiscal frameworks, then suggests a 'menu' of possible changes to improve the UK approach. Scrutiny and a variety of governance features also deserve attention. While not all practices elsewhere can be directly adopted in the UK institutional setting and some would encounter political sensitivities, many can.
Understanding today's conflicts and compromises requires addressing the entanglement between material processes and the viewpoints of a variety of collective actors: how they understand themselves and the economy within which they act, what objectives they perceive it affords to them, and what constraints it imposes. The structural approach to economic analysis, which builds on the traditions started by Physiocracy and classical political economy, offers a vantage point to understand material processes. The paper proposes three directions to generalise it, thus making it more suitable to address the entanglement between such processes and the emergence and viewpoints of collective actors.
