Macroeconomics

For over thirty years, the Women’s Budget Group has been criticising mainstream economic policy for its tendency to focus only on paid activities. Its failure to take into account unpaid care and domestic work, which is mostly done by women, renders this work invisible, even though it is fundamental for human life and the economy.

For this reason, a key part of creating an enabling environment for a caring economy is transforming the current fiscal and monetary policy framework. We need to end the primacy of GDP growth as the key objective of economic activity, and instead prioritise equality, wellbeing and sustainability objectives.

Macroeconomic policy is the use of monetary and fiscal policy to achieve economy-wide objectives. Monetary policy is typically conducted by central banks and comprises decisions about interest rates, financial regulation and inflation targeting. Fiscal policy is determined by the government and covers public expenditure, taxation and borrowing.

In order to refocus the overall macroeconomic policy framework on building and maintaining a caring economy and move away from austerity, we believe there should be better and closer coordination of fiscal and monetary policy. This must go hand-in-hand with a fundamental re-thinking of fiscal rules that prioritise spending on physical infrastructure over spending on social infrastructure.

How to pay for public investments, how much and how to tax, and when and for what the government should borrow should not be guided by self-imposed restrictive targets for government borrowing and reducing the budget deficit. Instead, these decisions should be made in light of their impact on equality and well-being. Failing to do so risks worsening economic conditions for women and deepening inequality.