Workability of the British Governments Planning - Article Example

Although the rates are low, the plan is continued to be criticized for its failure to maintain or raise the GDP and worsen the fiscal outcomes.
The plan was only seen to raise the economic level at its initial stages of launch when the GDP increased by 8.3% in 2013-14 as compared to2010-11. It seems that the Prime Minister is trying to force this plan which is not according to the opinions of the fiscal policymakers however much harm it might be causing to the economic development. The government should apply fiscal policy to come out of the economic problems it’s currently facing and the efforts to correct the situation without consideration of the fiscal policy will lead to the argument that discretionary fiscal policy is unnecessary.

The fiscal policy is supposed to be sustainable and cyclic with adjustments to balance the economic situations.
Like it had been experienced, criticism like those from Keynesians had brought back the economy to its recovery in 1980 when the retail price inflation was seen to peak at 21.9%. This was reduced by the action of the bank which peaked its rate at 17%. By so doing, the rate of borrowing was raised hence only a few people could afford to borrow funds. This reduces the money supply in the market which further raises the value of money thus reducing the inflation level.

The prime minister should not expect monetary policy to achieve much since the debt of the country only changed from over-indebted banks to over-indebted household borrowing. What the government should do is to use direct monetary financing of even larger fiscal deficits as this is seen to be more effective and less damaging than using looser monetary policy. The prime minister, however, does not want to use the monetary and fiscal policy to change the economy and this has made the UK economy six times weaker than it was in the 1980s and 1990s. Read More