The Future of Federalism
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The Future of Federalism

Intergovernmental Financial Relations in an Age of Austerity

Edited by Richard Eccleston and Rick Krever

The crisis and its aftermath had a dramatic short-term effect on federal relations and, as the twelve case studies in this volume show, set in place a new set of socio-political factors that are shaping the longer-run process of institutional evolution and adaptation in federal systems. This illuminating book illustrates how an understanding of these complex dynamics is crucial to the development of policies needed for effective and sustainable federal governance in the twenty-first century.​
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Chapter 5: The gathering storm: federalization and constitutional change in the United Kingdom

Simon Lee


This chapter provides an analysis of the changing nature of intergovernmental relations in the UK in light of its unique historical and constitutional context as a ‘state-nation’, of which England is overwhelmingly the largest component. England may have become more economically dominant within the union owing to London’s important role as a global financial centre, yet politically the City of London was also a cause of the financial crisis of 2008–9. While fiscal policy is determined centrally, ongoing devolutionary reforms have conferred some budgetary independence on Scotland, Wales and Northern Ireland, and fiscal equalization under the ‘Barnett formula’ is now generating political controversy amid long-lasting economic austerity policies in the aftermath of the financial crisis. The greater level of fiscal federalism being created in the longer term will pose increasing political challenges for the devolved administrations, and the prospects of the constituent nations of the UK holding together.

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