Budget Balance Flashcards

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What is the government’s budget balance?

The gap between government revenue and government spending in a year.

Budget balance = government revenue − government spending.

Revenue equals spending. The budget balance is zero.

Revenue is more than spending. The balance is positive.

Spending is more than revenue. The balance is negative and the government borrows.

One year, called the financial year.

A £20 billion budget deficit.

It raises tax revenue and can cut benefit spending. The deficit is likely to shrink.

Tax revenue falls and benefit spending rises. Spending then exceeds revenue.

Raise taxes or cut government spending.

The deficit is this year’s shortfall. National debt is the total owed from past deficits.

It helps compare the size of the deficit across years or countries of different sizes.