Economics Articles

Essays on topical issues, latest developments in UK and global economies, and answers to readers questions

Is austerity necessary?

Posted on November 25, 2015

Since 2010, the UK economy has been dominated by spending cuts and a the desire to run a budget surplus as soon as possible. In the political world, the government deficit is often portrayed as the source of many economic ills, and eliminating the deficit one of the highest macro objectives. However the government deficit …


How is government spending rising at a time of spending cuts?

Posted on November 24, 2015

Readers Question: Why are there government spending cuts at a time of rising government spending? One of the confusing elements of ‘austerity’ and government spending cuts is that from one perspective, we can have a rise in total government spending – but some areas of government spending see cuts. Source: ONS Public Sector Finances MF6U …


Impact of cutting government spending

Posted on November 23, 2015

Readers Question: Discuss the impact of a decrease in government spending? If the UK government cut government spending it would have a significant impact on both aggregate demand (AD) and the supply side of the economy – depending on which areas of public spending were cut. Firstly, government spending (G) is a component of Aggregate …