U.K. Economy Essay -- Economics Fiscal Policy Essays

U.K. EconomyThe UK government currently has four main macro scotch aims that itis pursuing. These aims are those of low unemployment, low inflation,and high and stable scotch growth as well as a favourable balance ofpayments current account position. This essay allow concentrate on thegovernments success in the first three of its aims listed above andhow these macroeconomic aims can or have been achieved using fiscaland monetary policy. Fiscal policy is utilize to affect aggregate demandby altering taxation and government spending monetary policy alsoaffects aggregate demand by the treatment of interest rates and thesupply of money.Economic growth is the prime measurement of a countrys prudence as itreflects improvements in standards of living. It is defined as anincrease in the returnive potential of the preservation and is usuallymeasured in terms of rate of change of real gross domestic product(gross domestic product), which is the value of output produced within an economy over 12months. It must be remembered that for each social class, the percentage changein gross domestic product is shown therefore both positive figure will represent a growthin the annual GDP level. The swift growth the UK experienced from 1982 to1988. This growth in GDP decreased from the 5.2% level experienced in1988 to 2.2% in 1989 and fell to its lowest in 1991 at 1.4%. This isdue to the recession that hit the UK during this period. After thenegative year of growth in 1991, the UK economy began its recoveryfrom the recession and consequently there was a healthy growth in GDPfrom 1992, which lasted up until 2001. In 2000 the GDP growth figurestood at 3%, this is mainly due to the increase in consumer spendingand capital investment that occurred during this year. The mostsatisfying aspect of this economic growth is the fact that at the timeit coincided with the achievement of the governments secondmacroeconomic aim of low. Last year however the economy grew by just1.7%, which is the lowest for a decade. This low rate of UK economicgrowth coincided with the position of the manufacturing sector, whichin 2002 was in a deep recession and is to the manufacturing industryto shoot the breeze for a further interest rate cut, to help push the value of thepound down, so that UK manufacturing export demand can increase.Inflation is the general a... ...enting the economy from entering a recession. Nevertheless thisis where we can see the difficulties in making these policies due totrade offs that occur, as a rate cut in scheme should lead to the rateof inflation to rise even further however this is a risk worth takingto end the current manufacturing recession as well as strengthenconsumption even further. Revising an expansionary fiscal policy(fall in taxation, increase in government spending) would also beadvisable. This will further boost aggregate demand and as supplyside economists may argue, shift aggregate supply to the righteffecting gr owth (a rise) unemployment (a fall), inflation (a fall), and then these goals to be met. It must be remembered that both policieshave time lags connected with them, in particular fiscal policy, forwhich they are greater. A decision to change an instrument musttherefore be consistent, as it may not always have the desired effectinstantly. Bibliographywww.statistics.gov.ukwww.bized.ac.uk/www.hm-treasury.gov.ukhttp//www.tutor2u.netwww.telegraph.co.uk/businesshttp//news.bbc.co.uk/1/hi/business/economy/default.stmEconomics Sloman.