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AS Macro Key Term: Fiscal Deficit
3rd April 2011
The fiscal deficit (or the budget deficit) is the amount by which government spending on state provided goods & services, transfers and capital spending exceeds income from taxation. A fiscal deficit must be financed usually by the issue of new government debt. Data for the UK’s fiscal deficit is shown in the following charts. The UK Coalition government has set an ambitious (and controversial) target to eliminate the structural element of the fiscal deficit over the course of the next four years.
The first chart below tracks UK government borrowing as a share of GDP
Data from Timetric.
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United Kingdom from Timetric
Some countries continue to run fiscal surpluses even despite the global economic downturn of 2008-09 - a good example is Norway.
Data from Timetric.
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Norway General Government Financial Balances from Timetric
In contrast to Greece!
Data from Timetric.
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Greece General Government Financial Balances from Timetric
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.