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the required living wage £8.55 in
London to buy basic necessities. As a
consequence, it is believed that the
government is showing little concern
to the poorest in society and is simply
looking to balance their own books.
It is very important for inflation to
remain under control. An example
of out of control price rises was in
Germany at the end of the First World
War, where the American dollar was
worth 4,210,500,000,000 German
Marks. Thus, the currency was replaced
with goods like farm animals to
be used as a medium of exchange,
since the Mark could no longer value
German produce.
This would be an extreme example of
a UK economist nightmare. However,
if UK prices continue to rise ahead of
our wages, then the UK could face its
own struggle with inflation. As prices
increase ahead of wages, the amount
of goods and services we can purchase
with our own money decreases. It is
said our purchasing power would fall
and our standard of living would also
diminish.
Balanced Budget & Income
Distribution
The government is in a position where
it has adopted an austerity plan to
cut its spending and get more from
tax revenues to minimise its overall
total debt, which presently stands
at a massive £1.2 trillion. However,
the gap between the rich and poor
has steadily grown since the start of
the economic recession. In Britain, a
broad outlook will tell you that the
top 20% of households earned an
income of £78,300, while the bottom
20% struggled with earnings of £5,400
before tax (a ratio of
15:1).
This has not been
helped by rises in
VAT, inheritance
tax and stamp
duty, along with
job cuts in the
public sector,
which have left
charities like
Oxfam worried that
millions of adults
and children could be
pushed into poverty in
the next two decades.
The government has
responded with an
increase of minimum
wage to £6.31 an hour,
although still this goes
a long way from
reaching
Overall, George Osborne was quick
to remind us that the economy is not
‘out of the woods’ and is only showing
‘tentative signs’ of a recovery. It seems
the government must start to build
a recovery model based more on
improving output in export
industries, business
investment and better
social protection for
the most vulnerable
groups in the modernday world. Only then,
with a more balanced
economy can the
government truly
bare fruits rather
than persist with a
problematic austerity
program, creating
average growth and
currently worrying high
unemployment.