Higher investment in the public sector would offset higher government debt, said John McDonnell.

The top finance official of the United Kingdom’s opposition Labour Party, John McDonnell, has said he wanted to set a new fiscal rule which would exclude borrowing for investment from the government’s budget targets.

McDonnell said in a speech that government debt would rise but a higher investment would boost public assets and strengthen the public sector.

Rents on new local authority housing homes and electricity produced by public sector energy agencies would be set against the cost of servicing the debt issued to build them, he said.

A ceiling on that debt servicing cost – in normal times – would be set at 10 percent of tax revenue, McDonnell said.

“On this at least there’s nothing radical, just common sense,” he said.

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