The Bank of England has the task of setting base interest rates to try and meet the government’s inflation target of 2%. The base rate is the rate at which the commercial banks have to borrow from the Bank of England. The Bank manages the money supply so that commercial banks usually end up having …
Black Wednesday refers to the date 16 September 1992, when the UK was forced out of the ERM. The Exchange rate mechanism was a key policy tool for the Conservative government. The logic of joining the ERM was that the chancellor Nigel Lawson believed that being in a fixed exchange rate Would help to reduce …
Definition: The announcement effect refers to the fact that behaviour can be changed merely by announcing a future policy change. For example, if the government say that petrol tax will increase in 6 months time, people may start spending less money now; they may also look for alternatives to the car. Announcement effects will be …
The UK has a complex system of benefits that hopes to reduce relative poverty, whilst avoiding the problems of reducing incentives to work. UK benefit spending Benefits include both means tested and universal benefits Source: OBR – Economic and Fiscal Outlook, fiscal supplementary tables, Dec. 2014 Main UK Benefits include: Pensions Incapacity benefit Unemployment benefit …
Benefit fraud and tax avoidance are currently emotive topics. What is the extent of benefit fraud and tax fraud in the UK? Benefit Fraud For 2011/12 (preliminary), it is estimated that 2.0 per cent of total benefit expenditure was overpaid due to fraud and error. In 2010/11 – benefit fraud was estimated at £3.4bn – …
Recently, a report suggested austerity can increase debt levels. Now, there is an indication that austerity could cause a decline in credit ratings. This has certainly been the experience of many European countries – who since they introduced austerity measures – have seen a reduction in their credit rating. Austerity hawks have often sold immediate …
Directors of big multinationals such as Amazon, Google and Starbucks received a challenging investigation by MPs annoyed that big multinationals are avoiding paying corporation tax. An Amazon director was described as being ‘deliberately evasive’ and being unacceptably ignorant of who owned the Luxembourg based Amazon company – used to avoid UK tax. According to Conservative …
One of the most talked about issues in US politics is the US fiscal cliff. The fiscal cliff refers to the situation at the end of 2012, where a series of tax increases and spending cuts (worth $600bn) are due to come into force automatically. This amounts to This will reduce the budget deficit, but …