Deficit reduction Flashcards
What was the aim of deficit reduction?
It was a form of fiscal discipline that the former Chancellor George Osborne used with various aims, such as reducing national borrowing and debt, all of which ultimately was to achieve balanced economic growth
Why was deficit reduction painful
Deficit reduction bears painful and unintended consequences because it was hitting the ‘just about managing’ the most through welfare cuts
Why was deficit reduction a good idea?
It is more important to bring Britain’s economy back to surplus
How much did government borrowing gone down?
Government borrowing is down 11.3% to £23.7bn despite being in a much slower pace than envisaged by the OBR.
Osborne’s quote on deficit reduction
Osborne was committed to deficit reduction by 2016
‘If our country doesn’t bring the deficit down, the deficit could bring out country down again’
Rising national debt
The national debt has increased by £91.7bn since January 2016, leading us to question the practicality of deficit reduction under the current economic climate
Counter point for not meeting the surplus target
Despite not meeting its surplus target, it was recession and tax revenues that made it impossible for governments to balance the books in four years’ time
The Bank of England keeping a stable interest rates
The Bank of England kept interest rates at 0.5% for the duration of the 2010 to 2015 parliament, which had cut returns on savings, but mortgage borrowers have benefited from lower repayments
The benefits of deficit reduction
• Consumer borrowing
With reference to figures published by the British Bankers’ Association, consumer borrowing continued to rise in December 2017, illustrating the benefits of deficit reduction.
Economic growth
The economy grew by 3% in 2014, which was revised up from an earlier estimate of 2.8%.
Cost of living crisis and deficit reduction
The cost of living crisis demonstrates the painful aspect of deficit reduction because governments were not spending enough money in welfare and investment
Cost of living crisis
• Food prices
Soaring food prices and childcare costs have hit families, with the cost of food is rising by 19% when compared with other goods between 2007 and 2011.
Number of children living in poverty
The number of children living in poverty could rise by 1.4 million by 2020, this accounts as an increase of 41% on the 3.5 million children currently living in poverty
Economic growth as a global issue
Economic growth is a global issue wherein a slow growth of the global economy would have an impact on the UK economy as well.
Unemployment levels at the end of 2015
At the end of 2015, unemployment was said to have fallen to its lowest level in seven years.
