Q&A: What is fiscal retrenchment?
Tuesday, April 07, 2009
Print
Email
Tweet This!Save to Favorites
Fiscal retrenchment means that a government has to introduce deflationary fiscal measures designed to reduce the amount of borrowing and debt that has been run up during the downturn and economic/financial crisis.
Ultimately fiscal retrenchment can be achieved in one of two ways
(1) Raising indirect and direct taxation
(2) Making cuts in the real level of government spending
Both are painful - tax hikes might choke off a tentative recovery and slashing government spending must hit the availability of public services - but fiscal retrenchment is the inevitable consequence of governments who have lost control of their own finances. The UK government was running sizeable budget deficits even when growth was strong - it forgot to mend the roof when the sun was shining.
blog comments powered by Disqus
Unit 3 Micro: Businesses Prospering During the Depression [13 May 2013]
Essential AS/A2 Economics - the Economics Booster CPD Course (20 June 2013) [6 May 2013]
Paul Ormerod: The Reinhardt and Rogoff miscalculation [25 Apr 2013]
Unit 2 Macro: UK and US Growth Compared [13 Apr 2013]
Paul Ormerod: Sovereign debt and Euro zone reality [11 Apr 2013]
Unit 2 Macro: Revision on Interest Rates [6 Apr 2013]
Unit 2 Macro: The Great Productivity Puzzle [5 Apr 2013]
Unit 4 Macro: Interest Rates and Business Failure Risk [3 Apr 2013]
Unit 4 Macro: Revise and Test - Aid and Micro Finance [31 Mar 2013]
Unit 2 Macro: Revise and Test - Macro Objectives [27 Mar 2013]
Paul Ormerod: What would Keynes have said? Ouija board active! [1 Mar 2013]
Unit 4 Macro: Fair Trade and Micro Finance - Spurs to Development? [20 Jan 2013]
Unit 2 Macro: Zombie Households and the Slow Recovery [18 Jan 2013]
Unit 4 Macro: Overseas Aid and Economic Development - Debt Relief and Debt Cancellation [17 Jan 2013]
Unit 4 Macro: Overseas Aid and Economic Development - Basic Background [14 Jan 2013]
Teaching Macro: Charts on the US Economy [13 Jan 2013]
AS Macro Revision - Key Term Revision Bank [11 Jan 2013]
AS Micro Revision - Key Term Revision Bank [11 Jan 2013]
Unit 4 Macro: The Failure of Austerity [5 Jan 2013]
Prospects for the UK Economy in 2013 [2 Jan 2013]
AS Economics Diagram Canvas [2 Jan 2013]
Unit 3 Micro: Revision Advice for the Exam [31 Dec 2012]
EdExcel Economics Unit 3 Micro - Structured Question Topic Tracker [23 Dec 2012]
Unit 2 Macro: Underemployment in the UK Economy [1 Dec 2012]
Macro Policy: A Lost Decade for the West? [19 Nov 2012]
Unit 2 Macro: The UK Economy - What Would Keynes Do? [7 Oct 2012]
Unit 4 Macro: Drivers of Economic Growth in India [29 Sep 2012]
A Very European Break Up - New Romantic Comedy [19 Sep 2012]
Unit 4 Macro: Development Indicators Top Trumps! [11 Sep 2012]
Unit 4 Macro: Can Spain Remain Competitive? [17 Jul 2012]
Unit 4 Macro: Fiscal Policy in the UK - A Question of Credibility [12 Jul 2012]
Who’s afraid of the Euro crisis? [14 Jun 2012]
End Depression Now! Paul Krugman at the LSE [30 May 2012]
Unit 2 Macro: Cyclical and Structural Economic Issues Facing the UK [23 May 2012]
Unit 2 Macro: The Importance of Productivity [20 May 2012]
Unit 2 Macro: Real Interest Rates [20 May 2012]
Q&A: What do we need to know about output gaps? [20 May 2012]
Unit 2 Macro: The Output Gap [20 May 2012]
Unit 2 Macro: Bank Cuts UK growth Forecast for 2012 [17 May 2012]
Unit 2 Macro: Revision Notes on Supply-side Policies [10 May 2012]
Unit 2 Macro: Model answer for revision data question [9 May 2012]
Unit 2 Macro: Monetary Policy and Inflation Glossary [5 May 2012]
Unit 2 Macro: Fiscal Policy Glossary [5 May 2012]
Unit 2 Macro: Economic Cycle Glossary [5 May 2012]
Exam Technique for Economics - Weesteps to Evaluation [5 May 2012]
Macro Revision - Key Statistics on the UK Economy [4 May 2012]
Robert Schiller - Finance and the Good Society [1 May 2012]
Macro Revision: Putting Things in Context [29 Apr 2012]
Unit 2 Macro: Britain back in Recession [29 Apr 2012]
Unit 4 Macro: The Euro Zone Crisis (Revision) [22 Apr 2012]
Preparing for the AS Economics Macro Paper 2012 [19 Apr 2012]
Ukraine Hotel ‘Bandits’? [12 Apr 2012]
Unit 2 Macro: Revision on Capital Investment [30 Mar 2012]
Life in the Slow Lane - UK Growth in 2011 Lags the Euro Area [28 Mar 2012]
Where does my money go? [20 Mar 2012]
Unit 4 Macro: Video Resources on the Euro Crisis [10 Mar 2012]
Unit 2 Macro: Policies to Drive Economic Recovery [9 Mar 2012]
Unit 4 Macro: Sovereign Wealth Funds [4 Mar 2012]
Unit 4 Macro: King on the UK Economy [15 Feb 2012]
Martin Wolf on Global Shocks [10 Feb 2012]
Trucks are the new way of measuring debt [1 Feb 2012]
Unit 2 Macro: Growth and Development - Some Indicators [31 Jan 2012]
Unit 4 Macro: Money, Debt and the New World Order [22 Jan 2012]
Unit 4 Macro: France loses her AAA credit rating [15 Jan 2012]
Unit 4 Macro: Economics of Fiscal Deficit Reduction [12 Jan 2012]
Unit 4 Macro: UK Bond Yields Reach Record Lows [11 Jan 2012]
Revision Presentation: Economics Evaluation Skills [10 Jan 2012]
Exam Advice: 10 Ideas for a Better Economics Paper [10 Jan 2012]
AS and A2 Economics - 10 Ways to Improve Evaluation [4 Jan 2012]
2011 in Review - The US Economy [27 Dec 2011]
Unit 2 Macro: The UK Housing Market in 2011 [26 Dec 2011]
The Eurozone Crisis Explained (again!) [22 Dec 2011]
Ten Things About Tax [23 Nov 2011]
Unit 2 Macro: Should the EU introduce a Tobin Tax? [15 Nov 2011]
AS Macro: The State of British Business [13 Nov 2011]
Eurozone crisis - a selection of resources [12 Nov 2011]
US Budget Visualised [7 Nov 2011]
Can the “invisible hand” solve Africa’s poverty? [13 Oct 2011]
Skidelsky in Madrid [12 Oct 2011]
Greek debt decision tree [25 Sep 2011]
Unit 4 Macro: Greek Economy at Default’s Door [25 Sep 2011]
Unit 2 Macro: Greece on the Brink of Default [25 Sep 2011]
Unit 4 Macro: IMF Flags up Risks of Double Dip [20 Sep 2011]
AQA AS ECON1 - Specification Resource Map [15 Sep 2011]
Unit 4 Macro: Dangers of High Inflation [11 Jul 2011]
Unit 2 Macro: Reducing Unemployment after a Recession [11 Jul 2011]
Nine Great Reasons for Economics & Business Teachers to use Twitter [28 Jun 2011]
AQA ECON4 Context [20 Jun 2011]
A2 Macro: Consumer Spending [30 May 2011]
AS Macro: Preparing for Unit 2 (May 2011) [25 May 2011]
AS Macro Key Term: Supply-Side Policies [25 May 2011]
AS Macro Key Term: Deflation [24 May 2011]
AS Macro Key Term: Economic Recovery [23 May 2011]
AS Macro Key Term: Recession [23 May 2011]
A2 Micro: The Importance of Profit [19 May 2011]
A2 Micro: Moving Away from Profit Max [18 May 2011]
EU Economics: Comparing the UK with Europe [14 May 2011]
AS Micro: Last-minute Unit 1 Exam Tips! [11 May 2011]
Interest Rates Held at 0.5% once again [5 May 2011]
AS Macro: Extended House Price Deflation? [5 May 2011]
AS & A2 Economics Revision / Exam Coaching Workshops Coming Up:
Monday 11 March 2013 - Portsmouth (Vue, Gunwharf Quays)
Wednesday 13 March 2013 - Fulham (Vue, Fulham Broadway)
Thursday 14 March 2013 - Stratford City (Vue, Westfield)
Friday 15 March 2013 - Bristol (Vue, Cribbs Causeway)
Monday 18 March 2013 - Birmingham (Vue, Star City)
Tuesday 19 March 2013 - Manchester (Vue, Salford Quays)
Thursday 21 March 2013 - Newcastle (Odeon, Metro Centre)
Friday 22 March 2013 - Leeds (Vue, The Light)
Monday 22 April 2013 - Stratford City (Vue, Westfield)
Join over 10,000 Economics teachers who receive our regular Economics Teacher Resource Newsletter:
