In the News Teaching Activity – how effectively does the 2024 Budget meet the needs of the UK economy? (Mar 2024)

There is lots of media analysis of last week’s 2024 Budget, with many commentators focusing on its likely political impact. However, economists need to consider whether the fiscal changes will address the economic weaknesses in the UK economy effectively.

A headline-grabbing 2p tax cut in National Insurance contributions is, perhaps, the current government’s last-ditched attempt to give themselves a chance to win over voters for the forthcoming General Election. However, it is the economic rather than the political impact that is more important for students of Economics. There are some fiscal announcements in the Budget designed to boost investment and productivity, two key underlying problem areas for the UK; there were other supply-side policies in the small print too, but are they enough to make a significant difference? The Chancellor ‘s choices were somewhat constrained by the state of public finances, but the further cut in NICs on top of the recent 2p cut just implemented might be enough to generate a bit of a ‘feel-good’ factor by putting a bit more spending power in people’s pockets.

Budget 2024: key points at a glance | Budget 2024 (spring) | The Guardian

1 What were the main economic announcements in Budget 2024?

2 Discuss how the fiscal policy changes in the Budget are likely to affect

(i) aggregate demand?

(ii) aggregate supply?

3 Discuss whether Budget 2024 met the needs of the economy.