Economics

Study Notes

What are Supply-Side Policies?

Level:
AS, A Level, IB
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Supply-side policies are mainly micro-economic policies aimed at making markets and industries operate more efficiently and contribute to a faster underlying-rate of growth of real national output.

Recent UK Government Supply-Side Policies

  • Relaxation of the Sunday trading laws – but worries over work-life balance
  • 24 new regional enterprise zones – aiming to take advantage of external economies of scale by attracting inward investment
  • Completion of London’s Cross Rail – with plans for Cross Rail 2 and HS3 (East-West high speed rail in North of England)
  • Tax relief for businesses investing in low carbon technologies – designed to increase investment in renewable energy capacity
  • Increases in the income tax free allowance to £11,000 a year
  • Reduction in taper rate at which universal benefit is taken away as people earn extra income from 65% to 63% - helps work incentives
  • Main rate of corporation tax (a tax on profits) - currently 20% - to fall to 17% by 2020 – designed to stimulate domestic I and FDI
  • UK National Infrastructure Plan – range of projects including the new nuclear power station at Hinkley Point in Somerset
  • Planned investment of £400m in 'full-fiber' super-fast broadband
  • £2.3 billion for a new Housing Infrastructure Fund – i.e. investment in improved road and water connections to support new housing

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