Real World examples for Macroeconomics
Fiscal policy
Key areas of government spending in the UK
Healthcare ( appr 20%)
Social security - pensioners + children/ working age ( 23%)
Education ( 10%)
Sources of tax revenue
Income tax ( 25% )
NIC ( 18%)
VAT (15%)
Government debt
2023 100% of UK’s GDP
2024 Budget
A reduction in NIC from 10% to 8%
- On average + £450
Help with the cost of living crisis
- Additional £500 million
New investment for the NHS
- £2.5 billion in funding to make progress on getting waiting lists down
- £3.4 billion to deliver 2% annual NHS productivity gains by 2028-29.
Help for working parents
- Full child benefits to be paid to households where highest-earning parent
earns up to £60,000 - the current limit is £50,000
Cigarettes, alcohol and vapes
- Freeze on alcohol duty
- New tax on vaping products from October 2026
- Tobacco duty to go up £2.00 per 100 cigarettes at same time, to ensure
vaping remains cheaper
, Automatic stabilisers
OECD estimates show that automatic stabilisers in the UK tend to offset over
half of the impact of a shock to disposable income
Expansionary fiscal policy - 2020 recession
- The temporary cut to the rate of VAT on food, accommodation and
entry fees to attractions from 20% to 5%, introduced in July 2020
- Coronavirus Job Retention Scheme - government paid 80% of the
wages
Contractionary fiscal policy - 2023
- Increased corporation tax 19% to 25%
- Windfall taxes on energy companies
Income distribution and welfare
Gini coefficient (year ending 2022) - 0.357
Poverty
- 1 in 5 people in the UK were in relative poverty in 2021/22
- 17% in absolute poverty
- 4.3 million children are growing up in poverty
Monetary policy
Expansionary - Covid
- Cut in interest rates from 0.75% to 0.25%, and then further to 0.1%
- Quantitative easing - qe expansion by £200bn
Contractionary - Cost of Living Crisis
- The Bank of England's interest rate, Bank rate, has risen from 0.1% in 2021 to
5.25% in August 2023. Bank rate has remained at 5.25% until now.
- Quantitative tightening: The Bank of England's asset purchases (mostly
government bonds) under quantitative easing stand at £744 billion, down
from a peak of £895 billion.
Fiscal policy
Key areas of government spending in the UK
Healthcare ( appr 20%)
Social security - pensioners + children/ working age ( 23%)
Education ( 10%)
Sources of tax revenue
Income tax ( 25% )
NIC ( 18%)
VAT (15%)
Government debt
2023 100% of UK’s GDP
2024 Budget
A reduction in NIC from 10% to 8%
- On average + £450
Help with the cost of living crisis
- Additional £500 million
New investment for the NHS
- £2.5 billion in funding to make progress on getting waiting lists down
- £3.4 billion to deliver 2% annual NHS productivity gains by 2028-29.
Help for working parents
- Full child benefits to be paid to households where highest-earning parent
earns up to £60,000 - the current limit is £50,000
Cigarettes, alcohol and vapes
- Freeze on alcohol duty
- New tax on vaping products from October 2026
- Tobacco duty to go up £2.00 per 100 cigarettes at same time, to ensure
vaping remains cheaper
, Automatic stabilisers
OECD estimates show that automatic stabilisers in the UK tend to offset over
half of the impact of a shock to disposable income
Expansionary fiscal policy - 2020 recession
- The temporary cut to the rate of VAT on food, accommodation and
entry fees to attractions from 20% to 5%, introduced in July 2020
- Coronavirus Job Retention Scheme - government paid 80% of the
wages
Contractionary fiscal policy - 2023
- Increased corporation tax 19% to 25%
- Windfall taxes on energy companies
Income distribution and welfare
Gini coefficient (year ending 2022) - 0.357
Poverty
- 1 in 5 people in the UK were in relative poverty in 2021/22
- 17% in absolute poverty
- 4.3 million children are growing up in poverty
Monetary policy
Expansionary - Covid
- Cut in interest rates from 0.75% to 0.25%, and then further to 0.1%
- Quantitative easing - qe expansion by £200bn
Contractionary - Cost of Living Crisis
- The Bank of England's interest rate, Bank rate, has risen from 0.1% in 2021 to
5.25% in August 2023. Bank rate has remained at 5.25% until now.
- Quantitative tightening: The Bank of England's asset purchases (mostly
government bonds) under quantitative easing stand at £744 billion, down
from a peak of £895 billion.
