History of Fiscal Policy in the Uk

What was the UK’s fiscal policy in the early 2000s?

Govt spending as a % of GDP increased, although within fiscal rules as laid down by then Chancellor Gordog n Brown.

These included only borrowing to fund capital projects and that the budget should balance over the course of the economic cycle.

What was the effects of the 2008 recession on Uk fiscal policy?

It put huge strain on govt tax revenue and expenditures, with the deficit reaching a peak of 7.5% of GDP.

There was a temporary VAT cut and increased public spending through increasing budget deficit.

What’s the OBR? When was it set up?

The Office for Budget Responsibility was set up in 2010 and analyse fiscal rules, providing independent credibility

What was the UK’s debt in 2012/3?

£1.185 trillion, equivalent to £18,606 per person.

What was the fiscal policy through the 2010s to covid?

Austerity - reducing the budget deficit through tightening govt spending

COVID fiscal policy

Furlough scheme and increased spending.

Highest debt/borrowing since WW2.

Focused on stability and employment.

What was Liz Truss’ mini budget?

Govt introduced huge tax cuts

However, were forced to U turn after adverse market reaction.

Was an attempt to boost growth