Thread by @Mij_Europe

So it's good there's a compromise over social care. But the bigger picture has been totally lost in the details of today's debate - namely that the UK is already aiming at tighter fiscal policy, while ROW & certainly the EU remains very focussed on supporting the econ recovery 1/

This is largely borne out of differences between @BorisJohnson and @RishiSunak. The PM wants to spend on levelling up, subsidising net-zero, new manifesto commitments and much more besides. He has his eye on the Red Wall 2/

Sunak thinks spending was ALREADY too high pre ~£400bn Govt has spent on Covid relief & is worried about debt servicing costs (given BoE projections of 4% inflation). He also wants to (re)build the party's credibility on fiscal policy vs Labour & is channeling Tory members 3/

Of course there will be more compromises going forward. Sunak will likely manage pressure from @10DowningStreet on spending via a combination of higher taxes (see today), a faster than expected recovery & covid inflicting less long-term econ damage than HMT/OBR previously thought

But the outcome of this internal pol dynamic between @BorisJohnson & @hmtreasury makes the UK something of an outlier - already putting it on a path of gradual deficit reduction. This is something EU won't seriously contemplate until 2023 (when its fiscal rules are reimposed) 5/

What those rules will be remains unclear. There is a risk the EU's fiscal correction in 2023 will be much more onerous than the path the UK is articulating today (see electoral devs in Ger with FDP). But that doesn't change fact UK is leading the pack on THE fundamental question:

Should Govt's continue with the high public spending they have adopted during the coronavirus pandemic - or begin the process of debt reduction ("fiscal tapering")? And if the latter, how and at what pace?

ENDS