Sustainable Public Finances Flashcards

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What does “sustainable public finances” mean?

It means the government can pay its bills and debts now and in the future, without big tax rises or deep spending cuts.

It is when the government spends more than it raises in taxes and other income in a year.

It is when the government raises more money than it spends in a year.

The total amount the government owes from past borrowing.

Raise taxes, cut spending, or help the economy grow so tax income goes up.

Interest payments take up money, so there is less to spend on services. Lenders may also charge higher interest.

It compares the national debt to the size of the economy (GDP). A lower or falling ratio is usually safer.

Changes that happen on their own: in a downturn, tax income falls and benefits rise, so the deficit gets bigger; in a boom, the reverse.

Current spending is day-to-day costs like wages. Capital spending is on long-term projects like roads and schools.

A target the government sets for borrowing or debt, such as aiming for debt to fall as a share of GDP.