When the coalition government agreement was announced on 24 May 2010, the number one priority was set: reduction of the government deficit. As far back as April 2009, the Labour chancellor had forecast a budget deficit of £170 billion for the 2010/11 financial year. This extraordinary figure (11.5% of Britain’s annual output, its ‘GDP’) had come about because of two factors:
• an unexpected shortfall in government tax revenues in the years 2007–10, i.e. the shortfall began even before the recession hit in 2008; this meant that the Labour government’s spending plans were not fully covered by taxation an unexpected shortfall in government tax revenues in the years 2007–10, i.e. the shortfall began even before the recession hit in 2008; this meant that the Labour government’s spending plans were not fully covered by taxation
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