Economic Crisis

However, in order to achieve a sustained level of increase in the aggregate output level, it is important that the government must take efforts which can stabilize the economy. Over the period of time, the overall quantum and level of public debt have increased to a greater length within the UK. Higher public debt levels along with extra reliance on credit by the private sector have resulted in significant economic problems for the UK as an economy. (BBC.co.uk , 2011)
This economic situation of UK, therefore, required a rebalancing of an economy with the reconsideration of both the fiscal as well as monetary policies adopted by the current government of David Cameron. The changes in the fiscal policies of the government were aimed at improving the public finances in medium-term whereas changes brought in within monetary policy framework were aimed to disciplining the financial sector to play an active and positive role for the overall growth of the economy. The overall policy focus is on improving the health of the economy which has weakened in the wake of a current economic crisis.
One of the key policy measures was the changes in the overall taxation system within the country wherein government attempted to further rationalize the tax system. The overall aim of this was to further increase the efficiency of the tax system while at the same time achieves the necessary growth in the economy by increasing government revenue and reducing the tax burden on the private sector of the country. The government announced a system reduction in the main tax rate while further tax concessions have been given to both large as well as small businesses. This reduction is tax rate may be aimed at improving the profitability of the firms while at the same time allowing them to expand and grow in order to increase the level of investment within the economy. Lower tax rates will result in a price reduction which can invariably reduce inflation.

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