THE GOVERNMENT BUDGET AND NATIONAL DEBT THEME 4 MR BROMILOWqr s0.What ate the mala sources of government taxation income? {1.What te some ofthe main items included inthe previous busget?‘Summary of Budget 2018: Key points at-a-glance 4 Thepersonalalowance treshld, the rate at wich people str paying income tx at 20%, 86 fom E1501 £12,600 n Ap =a yar earer han panned 2. Thehigher ate income tax tress, te pint at which peooe star paying axa 4%, 8 from £48,200 0 £50,000 Apr 3. Natonl Ling Wage inceasng by 40%, fom £783 16 £821 en her, fem Apa 2010 ‘4. Taxrates ang tveshods ar iferentin Seating. The Scaltsh governments Finance Secretary Derek Mackay wit st eu is plan for Seats tax payers on 12 Deseret 5. All fest me buyers pur ‘ayer ret ng shared aquty hors af upto £50000 wl be sli for fst sme 1 Work atowancas far universal eget be nereated by £1.7on 7. 2Amion wring fame wi eee to Benet by £620 a year 8 Era of austen is “nally coming tan en, the charcllor says 1 2018 grout evecast downgraded t 13% rom 1.5% in March, det impact bad Spring wether 10. But forecast for 2019 raised tom 1.3% to 1.6% and annul forecasted fo 143,14, 158 and ‘Veh in2000, 2025, 2022 end 2023 respectively , $3.3 milion more people in werk since 2010 an 800,000 more job recast by 2022 12, Wages growth ats highest near 2 decade 18, Pub terowing 2018 ote £11 Son le than forcast a Marc, raprecenting 2% of ree omests roduc, (GDP) the ola value of geedsprosuced and sevces rovded 14, Borowing asa share of GP tose to 1.4% next year 15, Borrowing tla E31 8b, £25.7bn £23.60, £20 Ben and C19 Bb in neat the years 16. Dett as share of GOP peaked at 5.25 n 2016-17, fling to 63.7% ts year and to 74.1% hy 2023-24 17, 12% annual average growth in deparimentl spending promised 18 Exra £800 for preparations fo leaving the EU 19, An extra €160m for courtreroxrm police 20. An exta Eton for ard fores, for ybor-capabies andthe UK's new nuclear submarine ogra 21, New 2% gal services tx on UK revenues of i techrolopy companies, fem Apel 2020, 22. Proftale compares wit global sles of more han £500m wi be able 23, Confimation ofan extra £20. fer the NHS over the nest ve yeas 24, A minima entra £2bn a yo for mental hath eevcns 25. A£30n package for England's roa, inching repairs fo motrways and pthols 26, Aneta on paste packaging whic doesnot contain 30% reeyelbe materQ4\¢lao ‘National debt rises above _ | £2trn for first time,Public Debt Ellin ao 8 ‘won economishelpor | Souree: HM Treasury Pll finances Feb 2013UK Debt as % of GDP EEPSESGREREELESSSRESERR ‘WWW. ECONOMICSHELP.ORGChapter 81 ‘what isthe national debt? How much is the national debt as a XGDP and also in total? How much is the national debt DP for; Japan, Vietnam and China? What is the PSNCR? How much is the PSNCR as total and as GOP?-.why might goverment sponding erate ding recesion? 2.Why might revenue from taxation reduce during recession? .whatis the cyelial dict? ‘whats te structural ett?WHY IS THE UK’S NATIONAL DEBT SO LARGE? :.why have previous governments increased their spending on healthcare, education and soca security? 2.Why might taxation income be too low? 3.ow might the credit crunch have caused the national debt to crease? 4 Why has servicing the national debt been increasing?What is the significance of such a large national debt on? Increase or decrease? ‘Lal Debt interest payments Taxation eevenue Government spending ‘Asconomic aromth Suncome inequality Sri ating ‘LAlving standards of future ctzensWHAT ARE THE EFFECTS OF REDUCING THE NATIONAL DEB! ‘LDecreased government spending 2.ncreased taxation revenve + Productivity ems + Households 2.0ther fectsEVALUATION |L.Why might a national debt cause the rate of interest torso? 2.Will an increasing national debt always inerease debt servicing? '3How does today's national det effect future generations? Why? 4.Why might the national debt increase inflation? ‘5,Why might the national debt reduce the UK's credit rating? What impact will his have on debt servicing? {6.What effect might the national debt have on FDI?moves to ease tension , With Rome als omowing ate ft stapy ery fers ana Hs ctantsoon os ahs ; i i if : ° Ira ihe eo? ‘oe al that woe he ate eaten ‘Siresin alan bec hes he eee ari ‘ned yt EL Reel tis el ets ga dt (estates Si ct ners ne taco an powae Sun E eng ny ier ae Tet politic one e ErediGrmivaringitetahane @When you bore maney, you become brome em The et ge ett you elit sce frig eho "Ride oon orher na the ft, You yw tay yor it ae Hy ar ‘tong London then our ests ot the popes norco xore-Seson ft contin 0000) wheres yu Iv Manche youre ly toe et buy 8 ator ene-ht ts pce hve you de by ft you wi amon crane ‘none forms bank arauling sot py {ore This lon, cae a morgage, wi los era hen telat eb you eet ait dt of tues in ‘he UK and then tm 0 the ae ofthe Key words mel ib i Fan Fy Canmie re sani Household debt Howl ein he UC teal fat the money owed by. Hounds to ‘tunsation, many ork eats the Fecsod ctor hu 75% of och eat cari of mortgages, the realner Inclier brewing on cet cas dans thy ead fie for outta dt in he E676 Howes wheter yor det 23 ay burden Soper on Po en fo 009 rey Rein E6000 5) {Std ayen than yam ely £2n.000» yar Det bude a depend ‘hint ater. The ite pets ‘oan af 15000 woul be E30 year {oroxmately 125% of toa dapanle ince Ths igh compared th et ‘ovund8 serine 980% be ‘hepeacof aie nated 208 The gh Is the UK too indebted? Sheila Pugh reviews whether the debt of UK households and also UK government's National Debt are a source of concern lee of cee rate to nea pay Sion i vgn ok Soni a at peer etzrdnariy on Fereanplnastunn 2018 maga tes fenged om 8 t02 168 Thee crore rh ety yr rg ong ats of wall 5 27 beets of aia rong “he abit to bonow bps conases mast thee consump. over te Stine Mot peoples nd ogee hae suh scrote ot of tt Sauron toby shu Turenge "stage Son conto ene tron ure soe ed fr anger by ‘rnd te payer oe any yu ‘ype tape ts tay 0). Ey gan ete (eb mpond to cher mite es paar teat hy Dor sy ch met easing thm tum to hk ‘eam ey sparen carsumpton.© The dongs hush owe oh lee of eel et can Inti, Macroeconomic nti 1 'Coe esr recestons and ours hasolalince nudes to ‘a perapstotonog ana Bex tho ‘ethene me ther morgage repayment on ‘het cnsier Spending. Th rb they fal behind wth hele mage ‘spares then hey a i fog ther hous A morgage 3 see lo tnd the propery the cola he ‘onset odor pei a, ‘he pope. Cus in consumer genre ‘by Mahl cate hvseae wl ee Buareate comand td could te te ‘onary it a veesnon Othe Soc ‘ch could posi the sane res shop nt nears en Howe, the thea pot tw mac cone sabi depen on how the ets rtd beeen asl those pope wo love ean oncom ‘os (D. nh lhe to reac thes esungton the os flowing» nee Shock An ET 6 thee ofthe eof 3 rege a he toramers nn, ot ‘rast, your nome ms £40,000 eet, oceans fone yo tok ut 160600 mata te Your UT ul be ovata wih on fer no we te rea ete thier trom [acme Sine mi-2016 ovr 25% oo rorgepes fave av Ul of & amo Compre wr ner 15% she ed tefl the si oe pies late Irae, bt ao tensed compet betwen morgage supers wh ty te stele bret by ter ‘mo Facial nstailty swe tee Systemic o 3 high cance of hrs (lapang Tet franca bye frm ge acute of ume corse fea Aloe ir aneecied thre ne Prsssonlaleyousela Then incares side flo eee tes, then hoasealr may default che ec borwig so mat et ersumpton lvls (and orange Fepayme) Conner lone wpa of ets: eas on oe it dct ‘or aie I ans do nto eoagh ata a 5a bulla be he lees he they may became sce and ‘The National Debt hen goverment Spend mere than they ‘ea tac even hy ma bow take uth brn fds Coverhmet eeoning erie sng on Isang fr to20 yer spaying sn ae ite oes These a pat gover ‘tent booing, ss pers on 33 coumuys national Get The UES ral dt deste aroun 138 ‘on he Bank of End ws foundes ke wen Mousa debe nash debt texmaymssr in atin COP ons ZB Kata tw sexy © How igh? The U nats eta tie hgh bard det oer een nthe ‘eestor coped wise cartons, ‘penny cpl such the eit Inoue te tn COP However {8% wal blow peste sch 2 208 1, 179% 1999 nd 25% 1985 seminar Natl as pealy scr Suing na nd dpreson out Subseuen’ grat n CP a eee Ue buen Te URtigue of Be sant foray hgh compared thee ‘hanadeenomet ae) es ‘ble Gres atonal Debt/COP for aselcon of Sarveloed cones nthe Er te 3017 ws 1058 Fee 7 ean % iby it Span BK Ewan om gue: Pal Net at fom 16822020,1 The rks fom high ana do |S ueed to py theest onthe debe 2OV7-16eneUX goverment spt Son {oul sein areal 0 oe alo the Sour pron etn te the case of haber nator deb an thengherrmeteresetopersae mare ope lee gern iby ‘then condo ste serene secon td ch ange fs eset or even otwelgh the ‘imu toapgrcwe deren fom the oven ge Gt ch ed the ‘Severn: nig). bo a reene nad t be alloted fay he mers on goverment ‘Ses compa Gases fron iste tis pebem. I both Counrasnsions aes noosa COP “er cress faced mare ever tr oF ie es ny 3196 The erence cod Gre goverment tet pment tbe oof Corcompord wthjat a5 inthe {© 00 goverment etouton tie? ominmans can a do dts on tt Teporment of pine er inp by ng to eoay a Eunos of recent Ie bere tht Ute that the feces hibernate goverant onde to compere. Ths exits the ‘ea bye (hte on st 0 an bow st ‘much ere tes, irl et ‘esr ta she of GOP thw egreer eesion a greet wei Lenders peeve a raed oF edimeres ates ie ure Te vis ‘ces aoter reno wy outs might fovea THIS Aree oes Oe eee irene See ee eee Se ere ero Soe riteiie ren erties Oe eee conclusions gh ne of haat et reat oncane a igh lon dete o COP te Sot ene 2 preblen.n partly sn nana get en rea tome goveroment ‘howang ary at an eaprsonay a pally oH the weeny aa eesan, The ‘Seeger goth in COP ng bckben he ata bt ta COP. The Cans Pip Hammond ss erty gud tht gone com 2 eter toyto ctrl ee hang telnet spin Seating athe ey ‘Sl Conte sere cet tbe 2016 buen opted esd “We tne get det own os pce of GOP. Tey ha way fing ‘wns ing get aml rey yor oe paying of ec bt ad he ‘ina esr way fing which eh cna gon fe th igh ed ‘pony sow Tat the sar ny shin cur eto peputon of COP Fer eononic gto cetyl tae ara tamer tt lems he Ine of goermer expences ei a ely como over con igh hus de sth ik of epereesns inte ue. The ‘onsen erm ee ee oe sun en ‘Sh camo eeu withstands on consent an bu ay {aotreconsletly ufreseen sc na’) evel the wapeetabity of Puma ‘evo igh nator et 9 COP nti may commons the ait of agent 0 espn to nur ein by engaging exansoay Sl poly he lsd the aon (ete cenigh le ance taco eae dee gant al econ the ita dears poerage of COP es for tet low ots, Caer cod ciciad or ting mpd hs Oe 2018 budget ahi pone oan ery, rey THs ‘teins wanton erate |. Tees wee et veya ine cntty Sa Se tree haves very high national sig vs Sry Cattecoretio mde aay rah Pret al rece mcaea methcnpetafotge et aan fallin house prices on Ste ea ncanal households, banks, firms and ttn Esp ped Ta, the government. mane| SECTION A ‘Answer ONE question from this section You should spend 60 minutes on this secion. | (5) any runes nee expetenons ae ln sa et see (©) evant the case for curing public expenditure rather han raking taxes 363 means of redcing fal dois | *2{a) Assess the causes of absolute poverty in a developing country of your choice (b) To what extents reducing the number of peopl living in absclute poverty sufficient to achieve economic development? #3(a) Assess the economic effects ofthe growth of trading blocs on ihe global economy. (©) The UKis a member of the European Union but has not adopted the euro as its currency. To what extent do the benefits of membership of a monetary union such {35 the Eurozone outweigh the costs?SECTION Answer ONE question from this section, Write your answer in the space provided. You are advised to spend 30 minutes on this section. EITHER, 7 Thee of Aicas main trading blocs have agreed to form the Tipartte Free Tade Agreement (TFTA)-This will reate one of the world’ largest fe trade areas, stretching across 26 countries witha combined GDP of around £1tlon (Source: pseu comarca tadelmoga afin rade to aves wayfocotinental-commercrsUREONIORZEMDONSOT) Evaluate the effects of the growth of trading blocs such asthe TFTA on global trading patterns (Total for Question 7 = 25 marks) oR 8 Japan's budget deficit for 2017/18 is expected to be 4.6% of GDP Its national debts forecast inerease to above 250% of GOP by 2019. Evaluate the impact ofa large fiscal deficit and national debt on a country’s economy, (Total for Question 25 marks) Indicate which question you are answering by marking a cross in the box. Ifyou change your ‘mind, puta line through the box 8 and then indicate your new question witha cross & CChosen question number: Question? [I Question’ ‘write your answer here: