Macroeconomic Objectives and Problems - Essay Example

During this period it was clear that UK has been relying on ever-increasing levels of debt from booth private and public sectors. Macroeconomic situation during from this period has been characterized with instability in economic growth as well as high inflation rates, which have caused a reduction in real incomes (HM Treasury, 2012). Due to increased inflation rates, UK’s macroeconomic situation has exhibited weakening recovery of the economy. Inflation as identified is attributed to the 40% rise in the oil prices.

In addition, there has been increasing instability and uncertainty resulting from euro area crisis, which has so far resulted into reduced confidence amongst households and firms (HM Treasury, 2012). Consequently, this has continued to worsen the macroeconomic situation within the UK. Even though there have been serious adverse effects of the 2008-2009 financial crisis, UK’s economy grew by approximately 0.8% in 2011 (HM Treasury, 2012). With manufacturing output growing by 2.0%, the overall GDP unfortunately fell by approximately 0.

2% in 2011 thereby indicating instability in the macroeconomic growth (HM Treasury, 2012). . (pp. 8-15) what is the concept of "fiscal sustainability" and why is it important in the budget strategy? (pp. 7-9) how effective are current policies likely to be? (pp. 18-21) In order to attain the four main objectives of macroeconomic, full employment, stable economic growth, favorable balance of payments, as well as stability in general prices, the UK government develop various strategies. Some of the current macroeconomic strategies developed include (HM Treasury, 2012): Strategies for making public finances attain a sustainable position in addition to developing fiscal targets for the government.

This strategy is to ensure that other than stability within the public finances, UK’s economy will have fiscal policies that are credible enough to provide or caution against low long-term interest rates. Activating monetary policies within the economy in order to meet inflation targets whiles also enhancing availability of credit to various individuals and business entities that amy wish to privately engage in investment. Carrying out reforms within the financial sector. Such reforms are aimed at building resilience of the financial system whilst ensuring that there is reduced risk to the taxpayers within the economy.

Strategically reforming tax in order to make the economy a competitive place that attracts business entities. With such attraction, UK will have more business entities creating more employment opportunities in a bid to attaining full employment macroeconomic objective. Rebalancing and strengthening UK’s economy for future purposes thorough The Plab for Growth. This will include a more lucrative package for investment meant to not only boost economic growth but employment status of the nation. 3. What were the main fiscal measures