Evaluate the Impact of the Government Spending Cuts on the Uk Economy? Essay

Evaluate the impact of the government spending cuts on the UK economy?

The government has described the cuts as "inevitable", if it is to restore trust in the UK economy and effectively erase public borrowing over the next five years. But leading economists are divided over whether cutting spending by so much and so quickly is a good idea. Concerns remain over the impact cuts could have on the economy.

Government spending allows the UK to have certain facilities that we already demand high of, including the NHS, which is one of the biggest and most demanded service by the UK economy. If the government was to make cuts then services as such would also be forced to make cuts in terms of free service and its availability. This would cause demand within the economy to fall dramatically.

However on the other hand if the government was to stop spending as much then this could lead to incentive for others to start up private and profitable businesses which would increase the welfare of the UK economy. For example the NHS, there would be more private firms ready to invest. However the down fall to this would be that those who are unable to afford this service would not receive the benefits and therefore the UK health welfare would decrease dramatically.

On the other hand another advantage to these cuts would be the possibility of a decrease in income tax. The reason for this is due to the fact that the government has no other fair reason to take a high percentage of income tax because they are cutting on spending, the ration of private firms operating in the UK economy will be boosted and there will be more profit to be made. This would naturally also lead to a rise in jobs available, leading to an overall rise in general household income and GDP.

Another advantage to the government spending cuts would be that the economy would be able to get back on track and boost its productivity and output.   However the downfall to these cuts may be that economic growth...