Tuesday 24 January 2012

Bad News for Britain

The UK's budget deficit (amount by which government expenditure is in excess of tax revenues) rose above £1 trillion (£1,000,000,000,000!) for the first time, in December 2011. This spells bad news for us because:

1. It means the government's deficit reduction plan is not working, which could mean deeper cuts for the rest of 2012.

2. The Eurozone crisis

Use this as a case study for what happens if the government uses Keynesian policies to increase economic growth (Labour's government policies....). Unemployment rose the same time as the deficit reaches an all time high, evidence for crowding out?