UK Fiscal Policy After the Global Financial Crisis

The paper briefly reviews the fiscal policy in the UK prior to the onset of the financial crisis, and then during and after the crisis. It then advocates the case for the need for continuing budget deficits, which leads into the dangers of attempting to eliminate structural budget deficits. A brief section sketches an alternative policy approach to reduce budget deficit without harming economic activity. It is concluded that the aim to eliminate the structural deficit over a five year period is ill-founded and the resulting cuts in public expenditure are unnecessary and damaging to economic prosperity.