The Chancellor of the Exchequer should have his pay docked by up to 20 per cent if he fails to deliver a balanced budget, an influential think tank has recommended.
The Institute of Economic Affairs (IEA) says financial penalties would act as a 'debt brake' to force 'reckless' politicians to to act in the long-term national interest.
In a report co-written by Tory rising star Kwasi Kwarteng the IEA recommends a return to 'Victorian' prudence, with the government spending only what it receives in each tax year.
Between 1830 and 1913 the UK's budget deficit averaged close to zero. But from 2002 the Government started running deficits and as the financial crisis took hold in 2008 debts spiralled.
The report, seen by the Daily Telegraph, says that mounting debts during the boom years left authorities ill-equipped for the task of bailing out the City.
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