Discuss about the Budget and Budget Making Process in the United Kingdom.
A budget alludes to a quantitative financial plan for a certain period of time. It is quantitatively expressed to include far diverse aspects which includes resource quantities, cash flows, assets, costs and expenses, planned sales volumes, liabilities, resource quantities and revenues. The conceptual framework of a budget is indicated by the level of interplay that the sectors of economy have established an interdependence in the United Kingdom’s 2017 budgetary allocations.
Markedly, a budget should be able to open up the entire economy to scrutiny. This article’s preclude of projections on each sector leaves a lot to be desired with regard to what it means for the ordinary British citizen. For instance, key sectors such as Education with an allocation of £ 320 million for development and a further £ 216 million for maintenance of the existing institutions, £690 million for local government, £670 million for Scottish, Welsh and Northern Irish governments, £2bn social welfare all sum up what a budget entails. Basically, this article tries to explain the budget as an allocation of sums of money to specific proposals as well as the summary of such expenditures. It provides a projection of how a certain project can be conducted with regard to the output generation and the input (Bury and Wiliam 2017). Budgets exist for a range of reasons which includes controlling resources, accountability, and provision of visibility to the company’s performance among others.
All in all, budgets stick mainly for the purpose of providing a platform which managers can use to achieve the goals of their specific entities. For example, the allocation of the £320 million for disruption of technology is meant to cushion those affected by such technologies as it regards loss of jobs. A bigger expenditure on unemployment as shown in the budget begs the question, what rate has unemployment been growing? Fiscal policy on the other hand indicates the use of revenue collection and expenditure to influence a country’s economy. The influence is particularly conducted by the government.
The UK government has laid out a straight forward strategy that ensures that maximization of revenue collection is achieved through an allocation of £820 million on tax avoidance measures. Conceptualization of the fiscal policy is best explored by Keynesian group of economics (Lehman et all 2017). They state that when there are changes in the levels of taxation as well as the levels of government spending, it drastically influences aggregate demand coupled with the economic activity. This can be explained in the manner that there has been a major reduction in the taxation of basic consumer goods such as sugar at 18% from its initial 24% which is sought to increase the aggregate demand and supply heading into the future. There has also been a new minimum tax on cigarettes and alcohol which is expected to increase revenue collection from these sin products. Fiscal policy is therefore sought after to bring stability to dilapidated economy particularly in the course of business cycles, that is the periodical economic boom and boost.
The article’s concept of a budget surplus which refers to a period where the outlays are exceeded by the income stream does not actually indicate its presence in the budget 2017. Basically, it means that the income generated is superior to what is being spent. However, there is less to suggest that the United Kingdom’s economy is progressing at a pace common among the developed countries.
A better progress should be reflected by a surplus. In this case, with borrowing figures being forecast at £59bn in 2017 followed by a further forecast of £46.5bn, £22bn ,£21bn £21, £17.2bn as from 2018-2019, 2019-2020, 2020-2021 and 2021-2022 respectively means that a surplus in the UK budget is still a long show. On the other hand, a deficit reflects a situation where the expenses exceed the income. The aforementioned incidences of borrowing shows that the UK budget is wallowing in borrowings which indicates a budget deficit. It is a matter of concern especially in a period growth is supposed to hit the 2.0% mark according to the Chancellor.
Outlays alludes to the proportion of income that is spent by the government to run its projects, pay the civil servants and conduct other functions. These outlays differ from one ministry to another. For instance, the UK is expected to spend a total of £30million on women affairs, £516million on education, £670million on the three governments of Scotland, Wales and Northern Island (Mason & Treanor 6). On the other hand, the revenues establish where the government will get the money that is allocated to its departments. Most of the revenues has to be collected through taxation and other investments.
The tools and types of fiscal policy indicates the approaches and measures that the government uses to balance spending and investment within the economy. The article postulates that these tools are aimed to enhance sustainability by focusing on taxation to achieve the highest revenue, a well-structured and inclusive budgetary allocation, public debt, public debts and public expenditure as well. A budget in particular is important in establishing this. All these sectors have specifically been made as to create harmony in the resource distribution in particular budgetary allocations.
A discretionary expansionary policy is in the least a theory in the budgetary allocations as indicated by this paper. Most people can be deduced to be shy of making any savings. The increase in taxation here implies that upon payment of taxes and a small fraction of expenditure, most Britons do not have a larger balance in their income. On the other hand, non-discretionary expansionary fiscal policy tries to explain the lack of individual income after paying all their taxes. A contractionary fiscal policy illustrates the presence of a reduced government expenditure on the same. In this case the United Kingdom’s suffers from massive borrowing scale which again means there is a smaller degree of economic expansion.
Just like any other economy, the United Kingdom is faced with the problem of making maximum revenue collection in order to realize its projects. As emphasized in the article, the economy is nailed to grow at 2.0% in 2017-2018 which is a remarkable 0.6% increase, maximum state funding is a likely proposition. Realization of this growth will be centered on an upsurge on aggregate demand. This has to come from transfer payments. For instance, a situation where the British government increases its spending up to $100 million in TR will trickle down to consumers in terms of an increase in the disposable income as well further increasing AE. This has an effect of igniting performance in other sectors of the economy. Employment levels are bound to increase due to an increase in government expenditure. Production will therefore increase as firms expand their scale of operations. Economy expands creating employment opportunities. An increase in production in effect leads to a reduction in the inventory stock as firms bounce back from a period of plummeting production capacities. Basically, a rise in the government spending leads to a series of results which eventually translates to a rise in the Real Gross Domestic Product as indicated by the movement from Y0 to Y1.
The United Kingdom is a huge economic magnet in the world because it is under renewed and massive borrowing which could stifle the efforts to increase revenue collection. With a decreasing level of revenue collection by 29% and only standing at £140bn on average since 2010 according to the Chancellor means that greater efforts need to be put in place to increase the revenue collection. The budget does not work on a surplus as more people have to be catered for the existing numerous social schemes. With an economic gain in 2018 rising higher than the previous performances. The budget is destined to realize its growth in the face of this new rival. Mr. Hammond establishes that things such as the digital technology should be taxed more. Inclusion in the entire process should be advocated for because collection of satisfactory amount can only be arrived at when people in Britain are contributing to wholesome. Apparently, the economy is not having a smooth transition. Efforts can only be advanced should the government’s continual to expand the economy to 2.0% from its current 1.4% growth rate.
References
Lehmann, L.T., Jardine, M.M., Vidotto, A.A., Mackay, D.H., See, V., Donati, J.F., Folsom, C.P., Jeffers, S.V., Marsden, S.C., Morin, J. and Petit, P., 2017. The energy budget of stellar magnetic fields: comparing non-potential simulations and observations. Monthly Notices of the Royal Astronomical Society: Letters, 466(1), pp.L24-L28.
Treanor, J., & Mason, R. 2017. Budget 2017: key points at a glance. The Guardina. Retrieved from: https://www.theguardian.com/uk-news/2017/mar/08/key-points-of-budget-2017-at-a-glance-analysis
Bury, L., & William, C. 2017. Budget 2017: Key points and summary at a glance. The Telegraph. Retrived from: https://www.telegraph.co.uk/business/2017/03/08/budget-2017-key-points-summary/
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