A) Supply the articles where necessary.
b) Write down 3-5 questions about the texts.
c) Compare the problems the two countries are trying to solve
Fiscal Policy in the uk
Fiscal policy in … UK is guided by two strict rules:
… Government will borrow only to invest and not to fund current spending;
and
net public debts as … proportion of GDP will be held at … stable and prudent level.
These rules mean that … taxpayers pay for … current spending and require public borrowing to be kept under firm control.
The Finance Act 1998 established a new Code for Fiscal Stability, which requires fiscal and debt management policy to be carried out in accordance with five key principles:
transparency in setting fiscal policy objectives, the implementation of fiscal policy and the publication of the public accounts;
stability in … fiscal policy-making process and in … way that fiscal policy affects … economy;
responsibility in the management of the public finances;
fairness, including between … generations; and
efficiency in the design and implementation of fiscal policy, and in managing both sides of … public sector balance sheet.
In practice it means that the public finance and fiscal strategy in UK will be aimed at setting overall spending limits for individual departments and planning and controlling public expenditure more strictly within … framework of capital and current budgets.
A) Fill each gap with a suitable word from the box.
b) Sum up the text in 5-7 sentences and present your summary in class.
repaid
supply
occur
reliance
adversely
reduced
leads
bank
limit
Since the early 1970s quite a number of countries have been experiencing serious financial problems which have caused growing budget deficits.
Trying to find solutions to swollen budget deficits, governments undertake austerity programmes, work out harsh budget, implement macroeconomic stabilization, establish priorities for government spendings, analyse effects of different ways of financing their budget deficits.
In principle, budget deficits may be _____ by borrowing from domestic bank and nonblank sources, and from the rest of the world excessive ____ on any of these methods of finance may be dangerous because:
Government borrowing from central ____ directly affects the monetary base and the money ____. Excessive growth in the money supply leads to high inflation rates and balance-of-payments problems.
Substantial borrowing from the nonblank sector may ____ affect the structure of demand and growth potential. In particular, this borrowing may ____ the availability of resources to finance private investment. Such “crowding out” of private investment may ____ through the impact of government borrowing on domestic interest rates.
Reliance on external finance ____ to the accumulation of debt, which needs to be serviced and eventually _____.
A prudent fiscal policy permits a public deficits, but it must be maintained at a level consistent with other macroeconomic objectives: controlling inflation, promoting private investment, and maintaining external creditworthiness.
Words you may need:
austerity programme – програма жорсткої економії
harsh – жорсткий, суворий
“crowding out” – витіснення приватних інвестицій державними витратами