------------------------------------------------------------------------------------------------------------------ Introduction
The UK Government has spent £1 trillion on helping the economy, and more particularly the banks, during the credit crunch.
The Conservative-Lib Dem coalition government believes that spending cuts need to be made so that government borrowing can be seriously reduced. Apart from health care which has been "ring-fenced" (protected against cuts), they are asking each department to cut somewhere between 20-25% from their spending.
On Wednesday 20th October, Chancellor George Osborne will announce the details. Nobody is sure what will be cut. However, estimates say about 600,000 government workers will lose their jobs over the next few years.
What Would You Cut....?
From the BBC, this allows you to play around with diffferent possible government spending areas that could be cut:
ONE difficulty with studying economics is that there are so many new words to learn.
It is sometimes useful then, to have access to dictionaries which give you the meaning of these words.
There are many available on the internet. Some start with basic economics terms, others are for advanced students.
My advice if you don't know a word is look in more than one site, because you might find the way a word is described in one place is easier for you to understand than in another.
Here is a guide to some economic glossaries I think are useful:
1) Bized economics glossary - this is good place to start since it is written for A-level students.
2) The Economist magazine's glossary - from, of course, the best magazine in the world, which, of course, you are all reading every week. It is written for eductaed people who may not have studied economics, so should be quite easy for you to understand.....
3) AMOS web glossary - size is the advantage of this one, with over 3000 economics terms discussed. It is from the USA, so beware of some words which are different from those we use in the UK.
4) Dr T's Economic Glossary - written by a university teacher, this uses advanced language to describe the economic ideas you may already know. Better for A2 students than AS.
6) The Concise Encyclopedia of Economics - as the title suggests, not so much a dictionary as a series of short essays. Very interesting, but be aware that there is a bias to the writers of these essays - they are Austrian School economists (put very simply, very much in favour of the free market and against government).
If you want to buy an economics dictionary, this old one is still one of the most excellent available. I have a copy so if you'd like to have a look, just ask.....
I'VE been looking for some ways to visualise the huge amounts of money that governments owe.
Remember that "budget deficit" refers to the money a government borrows over a year, wheareas "national debt" is all of the money a government owes from borrowing in the past.
Here's an article about current UK government borrowing: uk record borrowing. This is the key information:
"TheUK's budget deficit rose to the highest level since at least 1993 reaching 15.3 billion pounds in August....
"...economists expect the deficit to be .... 149 billion pounds in 2010."
This sounds a lot but it's hard to imagine. Economists usually compare these big numbers with the total value of all production in the country. On this measure, the deficit for 2010 will be equivalent to about 10% of UK GDP. In other words, the government borrowing for this year will be the same value as 10% of all the goods and services made in Britain.
However, a billion of something is hard for us to imagine. This video may help....
Trying to find visualisations of a billion then led me to trying to do the same about a trillion. Whenever I hear the word "trillion", I often think about the US national debt, currently about $13 trillion!
I am now going to pause writing this blog and see how long the clock will take to increase by $1 million.....
Right, back again, it took 22 seconds. Therefore, US national debt is increasing by $1 million every 22 seconds!
Much of this is interest payments, calculated to be around $383 billion this year. Of course, this leads to an enormous opportunity cost where money that could have been spent on providing government goods and services is spent on interest payments. But also remember that if a government doesn't pay its debts (known as "defaulting") it won't be able to borrow money in the future, or if it can, it will be at even higher levels of interest. And then it won't be able to pay back the interest so they can borrow more money to make the interest payments.......
There is a clock in New York which shows the US National Debt. A couple of years ago there was a problem with it:
If a billion is hard to imagine, a trillion must be even more difficult.
These 2 visualisations may help:
One last number to draw attention to: the total cost of the government spending caused by the credit crunch so far has been .... $10,000,000,000,000 (10 trillion).
Although actually this is only up July 2009 (see this BBC article).
Recently, some economists have been arguing that the Bank of England needs to put even more money into the economy to make sure we do not fall back into recession (time for more QE?).
