Economic Policy Essay

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Government economic policy is concerned with influencing or controlling the behaviour of the economy. It is the implementation and administration of policies typically implemented by the government. Economic policy is often focused on decisions made in regards to government spending and taxation, the redistribution of income from rich to poor and the supply of money. Economic policy directly affects global issues as decision by government dictate events in the economy. A prominent example of economic policy as a result of global issues would be the decisions made by the UK government after the global financial crisis. Following a period of economic boom, a financial bubble burst this occurred on a global scale. This resulted in some of the world’s largest financial institutions to collapse. With the preceding recession, the UK government and many others resorted to large-scale bailout and rescue packages for the surviving banks and financial institutions and alternatively imposing harsh austerity measures on themselves to decrease economic spending. This recession saw governments globally lending large sums of money to funnel into the economy to ensure survival; this takes me on to the next example the issue of global debt. This directly affects decisions made by the UK government in regards to economic policy. In recent times the new Conservative government has made extensive cutbacks in health, education and other vital social services such as welfare and benefits. These structural adjustment policies are aimed at reducing economic debt; however these recent cuts have seen many UK households struggling to survive and have landed a solid blow to the increasing poverty situation in the UK. Although the Conservative government jus... ... middle of paper ... ... from certain areas will have a negative effect. However recent income tax reforms will benefit all individuals earning less than £100,000, an increase in personal allowance in 2015 will see a vast majority of earners better off , this will see personal allowance rise from ££10,000 to £10,500, this additional non taxable £500 will permit 288,000 to go free from income tax, leaving them with more disposable income. This is seen as method geared towards redistributing income as low income earners are able to retain more of their wages and those who are in higher earning brackets continue to be taxed, this is considered progressive taxation. Recently redistribution of income has also occurred through measures such as an increase in the national minimum wage and tax credits extended to working families and families with children through working and child tax credits.
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