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European Economic Convergence

Volume 408: debated on Thursday 3 July 2003

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To ask the Chancellor of the Exchequer what estimate he has made of the rise in the tax burden necessary to offset inflationary pressures which would otherwise result in (a) a half per cent. rise in inflation, (b) a one per cent. rise inflation, (c) a one and a half per cent. rise in inflation and (d) a two per cent. rise in inflation, assuming that a decision to implement a discretionary fiscal policy was taken, as described in the Treasury document Fiscal stabilisation and EMU, and assuming a neutral monetary policy. [121556]

In the event that a discretionary fiscal policy response was needed within EMU, its likely size would depend on a number of factors, including the nature of the economic shock, the degree of wage and price flexibility within the UK, and which fiscal instrument was being used.