Budget Deficit

A budget deficit refers to the situation where the government is spending more than it receives in taxation and is therefore forced to borrow from the private sector. In the UK, the budget deficit is known as the PSNCR public sector net cash requirement.

Cyclical Budget Deficit

This is the budget deficit that occurs if the fluctuations of the economic cycle were ignored. This requires an estimate and will involve considering present growth rates and the long run trend rate of growth

UK Government Borrowing 1990-2011

borrowing

Annual budget deficit since 1990 as % of GDP

Difference between Budget Deficit and National Debt

The National Debt is the total cumulative amount that the government owe.

Note: Don’t confuse Budget Deficit with Current account deficit. The current account is concerned with exports and imports.

For more detail on budget deficit:

See: UK Budget deficit

 

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