Fiscal policy

Fiscal policy means the government deliberately changes how much it spends, how much it taxes, and whether it spends mor

Fiscal policy and supply-side policies

Fiscal policy

Fiscal policy — how governments tax and spend — works at two levels. It can steer the whole economy, and it can also cha

Fiscal policy and supply-side policies

Fiscal policy

Governments can boost or slow total spending in the economy by changing how much they spend or how much they tax. Spendi

Fiscal policy and supply-side policies

Fiscal policy

Governments can use spending and tax decisions to expand the economy's productive capacity. This shifts aggregate supply

Fiscal policy and supply-side policies

Fiscal policy

Governments use spending and taxes to shift resources across the economy. These decisions change who gets what, which se

Fiscal policy and supply-side policies

Fiscal policy

Governments spend money in several distinct ways. Each type serves a different purpose — from building hospitals to payi

Fiscal policy and supply-side policies

Fiscal policy

Governments collect taxes for several distinct reasons. These include funding public services, reducing inequality, corr

Fiscal policy and supply-side policies

Fiscal policy

A direct tax takes money straight from a person's income or wealth. An indirect tax adds to the price of goods and servi

Fiscal policy and supply-side policies

Fiscal policy

Taxes differ in how their burden changes as income rises. A progressive tax takes a larger share from higher earners, a

Fiscal policy and supply-side policies

Fiscal policy

Governments follow a set of principles when designing taxes. The most important principle is equity — taxes should be fa

Fiscal policy and supply-side policies

Fiscal policy

The UK government raises money through several different taxes. Each tax has a specific role and its own strengths and w

Fiscal policy and supply-side policies

Fiscal policy

Each year the government either spends more than it collects in tax (a budget deficit) or less (a budget surplus). Every

Fiscal policy and supply-side policies

Fiscal policy

A budget deficit has two parts: one that shrinks automatically as the economy grows (cyclical), and one that persists ev

Fiscal policy and supply-side policies

Fiscal policy

A budget deficit occurs when the government spends more than it collects in tax. A surplus is the opposite. Each has dis

Fiscal policy and supply-side policies

Fiscal policy

The national debt is the total amount the government owes from years of borrowing. A very large national debt can limit

Fiscal policy and supply-side policies

Fiscal policy

The Office for Budget Responsibility (OBR) is an independent body that checks and publishes forecasts for the UK economy

Fiscal policy and supply-side policies

Fiscal policy

Governments use fiscal policy — decisions about how much to spend, what to tax, and whether to run a budget deficit (spe

Fiscal policy and supply-side policies

Supply-side policies

Supply-side policies are actions a government takes to grow the economy's productive capacity. Supply-side improvements

Fiscal policy and supply-side policies

Supply-side policies

Supply-side policies are government actions that raise the economy's productive capacity. They do this by improving ince

Fiscal policy and supply-side policies

Supply-side policies

Governments can cut taxes to make working or investing more rewarding. This encourages people to work more and businesse

Fiscal policy and supply-side policies

Supply-side policies

Supply-side policies can reduce unemployment, keep inflation low, and help the UK sell more abroad than it buys. They do

Fiscal policy and supply-side policies

Supply-side policies

The natural rate of unemployment is the level of unemployment that persists even when the economy is healthy. Supply-sid

Fiscal policy and supply-side policies

Supply-side policies

Free market supply-side policies use market forces to grow the economy's productive capacity. They include cutting taxes

Fiscal policy and supply-side policies

Supply-side policies

Interventionist supply-side policies are actions where the government directly spends money or intervenes to boost the e

Fiscal policy and supply-side policies

Supply-side policies

Supply-side policies change how the whole economy performs, but they also change how individual markets and workers beha

Fiscal policy and supply-side policies

Supply-side policies

Supply-side policies are government actions designed to increase the productive capacity of the economy — in other words

Fiscal policy and supply-side policies