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

U.K. EconomyThe UK politics currently has four chief(prenominal) macro sparing aims that itis pursuing. These aims atomic number 18 those of low unemployment, low inflation,and high and stable economic growth as well as a favourable dimension ofpayments current account position. This essay will concent regulate 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. pecuniary policy is used to affect sum total demandby mending taxation and government spending monetary policy excessivelyaffects aggregate demand by the manipulation of interest rates and thesupply of money.stinting growth is the prime measurement of a countrys miserliness as itreflects improvements in standards of living. It is defined as anincrease in the arable potential of the economy and is usuallymeasured in terms of rate of change of real gross domestic product(gross domestic product), which is the va lue of payoff produced within an economy over 12months. It must be remembered that for individually year, the percentage changein GDP is shown therefore any prescribed figure will represent a growthin the yearly 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 final in 1991 at 1.4%. This is payable to the quoin that hit the UK during this period. After the cast out year of growth in 1991, the UK economy began its recoveryfrom the recession and thus there was a healthy growth in GDPfrom 1992, which lasted up until 2001. In 2000 the GDP growth figurestood at 3%, this is in the first place due to the increase in consumer spendingand capital investment that occurred during this year. The just aboutsatisfying aspect of this economic growth is the fact that at the mit coincided with the achievement of the governments secondmacroeconomic aim of lo w. finale year even 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 call for a encourage 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 get into 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. rewriting 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 mightily meating growth (a rise) unemployment (a fall), inflation (a fall),thus these goals to be met. It must be remembered that both(prenominal) 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.