Macroeconomics: UK economy, IB Economics

The latest public finance data is good news for the government, with government borrowing substantially down, to £7.8bn December, more than £8bn down on the same month last year. 

What's driven this improvement? Easy. Falling inflation has reduced interest payments on government debt. That said, total borrowing for the year so far is still £119.1bn and the national debt remains high, £2.67 trillion, equivalent to 97.7% of GDP, and at a level not seen since the 1960s. 

For those of you in Year 12, these may sound like alarming numbers. So how would you go about determining whether they are a concern or not?

For those of you in Year 13, thinking about forthcoming examinations you might think about trying to counter the Chief Secretary to the Treasury's view that "...it is right that we pay back these debts so future generations are not left to pick up the tab." Is it helpful to see government finances as equivalent to a household budget?