On Friday 23 September Kwasi Kwarteng the new chancellor introduced a set of tax cuts and energy price guarantees in a measure the treasury described as a ‘fiscal event.’ Yet even as he was reading out his series of unprecedented tax cuts (as share of GDP, 2nd biggest on record), markets took fright, causing the …
The UK government faces a perilous situation. In the short-term, there is a combined threat of an energy crisis, high inflation, risk of an imminent recession and a falling value of Sterling. On top of that, there are long-term problems such as climate change, a slowdown in growth and productivity, and rising debt to GDP. …
Trickle down economics is a term used to describe the belief that if high-income earners gain an increase in salary, then everyone in the economy will benefit as their increased income and wealth filter through to all sections in society. How the trickle-down effect may work in theory If the richest gain an increase in …
The EU relies heavily on Russia for the import of natural gas – around 40% of all natural gas at the start of 2022. Since June 2021, there has been a 60% cut in Russian gas, and this has caused considerable distress in the form of higher prices, inflation, lower economic growth and potentially devastating …
The economics of happiness seeks to relate economic decisions to a wider measure of welfare and happiness rather than traditional measures of just income and wealth. Happiness economics attempts to evaluate a wider range of factors affecting well-being, quality of life and self-reported levels happiness. There are now several measures of happiness, such as Gross …
A budget deficit is the annual shortfall between government spending and tax revenue. The deficit is the annual amount the government need to borrow. The deficit is primarily funded by selling government bonds (gilts) to the private sector. Summary of effects of a budget deficit Rise in national debt Higher debt interest payments Increase in …