Theme 4: National Debt Vs Budget Deficits

Unit 2 & 4: Budget deficits and Surplus

Thank you once again to Riz (where are the rest of you?) for sending me this article on how the UK government has managed to turn a monthly deficit into a surplus. This is good news in terms of reducing the UK's overall national debt burden.

Questions to think about:

Is reducing the national debt a good thing?
What could be a downside to this?
How has the government managed to turn a deficit into a surplus.
What does this mean for future macroeconomic policy?

Unit 4: Indonesia raise fuel prices by 30%

Thank you to Elliot for this interesting article on how the Indonesian government is trying to achieve certain objectives at the expense of others.

You will no doubt be aware that the main govt objectives are:

Low Inflation (Stable prices)
Low Unemployment
Sustainable Economic Growth
Healthy Balance of Trade
Strong Government fiscal position.

Governments will put certain objectives before others depending on circumstances. It ios clear that the Indonesian government (much like most of the developed world in recent years) are putting stable govt finances as a priority this year.

The question you would be asked to look at could be:

How will this policy affect the economy both in the short and the long run?

Unkit 2 & 4: Fiscal Policy - Osbourne style

It is the Budget announcement this week so it might be good to focus on fiscal policy on this blog.

This radio piece by Evan Davis might make a good place to start - seven minutes from the Today programme, in which he examines the objective of simultaneously growing the economy and shrinking public spending. 

In the first half of the programme there is a comparison with 2003-4, when government spending as a proportion of GDP was the equivalent of what the government hopes to achieve for 2017-8, at just under 40%. This includes an excerpt from the Budget speech of an optimistic Chancellor of the Exchequer Gordon Brown, happily declaring that the UK no longer suffers from "...the old British disease of stop-go". 

In the second half there is a discussion with Paul Johnson of the IFS (Institute for fiscal studies) about the room for manoeuvre available to the current Chancellor as he prepares this Budget, which highlights the extent of the cuts since 2010, and the opportunity cost of maintaining spending on health, pensions and schools on all other areas of government spending.

Unit 4: UK Budget Deficit - How can we imporve it?

Trying to make sense of the UK budget deficit

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