Labour.org.uk recently published this leaflet, explaining how their Fiscal Credibility Rule would work. Briefly they explain that:
-Labour will close the deficit on day-to-day
spending over five years.
-Labour make sure government debt is falling
at the end of five years.
-Labour will borrow only to invest.
If they insist on this needless self-imposed constraint (a capped budget rule), the only way the Government can bypass it, is if it does investment spending through a publicly owned bank & extends to that bank loan guarantees. The Government will only pay up if the public bank cashes in those loan guarantees, which it won’t, if the public bank issues loans based on prudent considerations for projects that benefit the real economy. In other words, the bank would only cash in the loan guarantees if the loans (the bank’s assets) go bad.