The+Economy

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The Economy

As with most other developed nations, British fiscal policy is focused currently on relieving itself from the worldwide depression. It has done this through multiple avenues, mainly in relation to cutting spending and and lowering taxes throughout the nation, as well as simplifying various parts of the budget. For example, Cameron lowered the VAT tax on the fourth of January by 2.5% in hopes of increasing public spending and improving the consumer sector. However, while doing this will help in the short term, many see the vast reduction of government spending as the main track to recovery in order to rectify the economy. Another, more controversial, tool used by politicians in hopes of combatting the deficit is the increase of tuition in all universities being raised from US $3000 to US $13500. Clearly, this would bring in incredible new amounts of revenue, but unfortunately it would be at the expense of some young people's chances at attending university. Also in the works for the economic system is a massive simplification of the welfare system as a whole. Instead of individuals being given various amounts of aid from various different agencies, such as food stamps from one, and unemployment checks from another, the new system would give each family one check for an amount dependant on the age and number of family members, which would greatly expedite the welfare process, as well as allowing families with different needs to use money as they see fit. Critics of this system point to its unintentional hypocracy, being that while it attempts to help the British people it is likely to reduce the number of jobs available because less people will be needed to run the streamlined process. Monetary stability is also achieved by set interest rates by the Bank of England. The BOE has fixed interest rates in an effort to keep inflation below 2%, thus preserving the value of the Pound Sterling. []
 * Policy: **

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The video shows the importance of the reform of the economy



Ever since the initial credit crunch that plagued the majority of Europe and the Economic power houses of the world, public opinion on the British economy has been negative to say the least. Public support of the governments economic leadership is at an all time low and is only now starting to recover.
 * Public Opinion: **

In relation to currency, a survey was held in 2010 over the issue of keeping the pound or not. The results overwhelmingly favored keeping the pound as the standard currency: 81% forthe pound and 9% against keeping the pound.

In a poll held by The Economist 71% of respondents mentioned the Economy as a concern of theres in a polling following the most resent election. In another polling by the same source held in November 2010 this number dropped to 54%. The public concern over the economy is still strong but it is slowly dropping.

The Economist Also reported that the higher class workers, management and professionals, are 11% more concerned with the economy than the lower class workers, skilled and unskilled laborers. The numbers fall out to be 63% to 42% respective. [|Article From The Economist]



Rapid fire debate between three party leaders prior to the 2010 general election
 * Party Opinion: **
 * 1) Conservative - No euro, see above. Seeking to combat the enormous deficit, Cameron and Chancellor Osborne have endorsed massive cuts in spending with comparatively small increases in taxes.
 * 2) Labour - Many fear Conservative's austere economic policies could bring a "double-dip" recession. Most support some tax increases and stimulus spending to rescue the nation from the recession.
 * 3) Liberal Democrats - Liberal Democrats have been slightly overshadowed in the coalition. Regardless, they support many of the samie initiatives including more effective allocation of funds, cuts on unecessary services, and cutting unneeded relief to the wealthy. Lastly, they support a radical restructuring of the tax system that would cut taxes on lower income families while eliminating tedious red tape for businesses. Overview of Liberal Democrats Economic Stand

The coming implications of the UK's aggressive fiscal policy are obviously difficult to predict. At this point, it essentially depends on who you talk to. The extreme scenarios on both sides are certainly clear: either the painful budget cuts and tax hikes will eventually reduce the country's rising debts and re-stimulate the floundering economy, or they will depress the economic outlook even more and send the UK into an even deeper recession. Either way, the coming months and years figure to be rocky ones. 1. [] This article published back in October clearly stands on one side of the spectrum. The author roundly criticizes David Cameron and the Conservatives for what he refers to as irresponsibly succumbing to the "fad" of fiscal austerity. He predicts dire implications for the UK's spending cuts and government layoffs--so dire, in fact, that he equates 2011 Britain with 1937 America and David Cameron with none other than Herbert Hoover. 2. [] This article uses evidence from two recent surveys to depict a grim outlook for the 2011 economy. The article cites a fall in December retail sales, sales tax increases, and high inflation as reasons for slowed economic growth at the end of the year. It also predicts that the downward trend will continue into the first two quarters of 2011 as government spending cuts start to kick in. 3. [] This is a transcript of a recent speech by David Cameron. He states that his fiscal policy--while tough to swallow--will eventually result in a balanced budget and increased confidence. He predicts a rough road ahead, but eventually his plan of getting behind enterprise and re-balancing the books will result in a "more prosperous and more fair economy." 4. This article studies evidence from past economic downturns to look at possible implications of the current recession and its attempted policy cures will have leading into 2011. The author suggests that this year will require belt-tightening and prudency to survive in the face of rising taxes, spending reductions, and high inflation. However, reasons to hope for long-term recovery exist: borrowing costs are low, the rest of the world economy is improving, and UK manufacturing is strengthening. According to him, the cost will be high, but the British system may very well avoid recession this year. []
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The above video shows the struggle the British pound faced during the economic downturn, showing a different side to the normally consistent currency.