#GE2019 We need to talk about...

What’s the difference between

Can the government just

create more money?
Government debt and deficit?
Debt is how much the government owes.
Deficit is the gap between how much a

Spending
government receives and how much it spends
The Bank of England (BoE) can and did after the in a year. It’s easy to get them confused!
financial crisis in 2008 (what’s called Quantitative
Easing). But the risk is that it causes inflation (prices

2
going up) and people losing confidence in the system.
The BoE is owned by the Government which sets its
goals but its day-to-day activities are independent.
93% Political parties have spent the last decade talking a lot about

1 debt
governments spending less (aka austerity). This 2019 election is
of government
different. Both Labour and the Conservatives are promising to
income this year
increase government spending.
will come from
Is government debt good or bad?
ta x
Are taxes good or bad?
tax We’ve made this guide to help you make sense of the debate
and work out where you stand.
The Conservatives want to up spending by £45 billion a year. BAD GOOD
Labour is pledging to spend £153 billion more each year. –H
 ave to spend billions –C
 an invest in things now that
of pounds on interest could have big benefits for
BAD GOOD payments future generations
– Reduces people’s take-
home pay
– Can fund better public services
like the NHS and schools How does our –R
 isk government is
seen as financially
–C
 an stimulate areas of
the economy which would
– Can make buying stuff
including essentials
– Can be used to redistribute
wealth from rich to poor government irresponsible

– Risk future generations are

benefit from government
spending
more expensive

– Can reduce consumption,

investment and jobs
– Can encourage people to save
money for when they’re retired,
ill or unemployed
get money? –C
left paying bills they didn’t
vote for or benefit from

 an reduce consumption
– And can do this even in
economic downturns when
tax receipts are low
created in private sector and investment in private

3
– Can fund government sector by increasing the
– Interferes in people’s spending aimed at boosting The
cost of borrowing and
economic decisions consumption, investment government making it relatively
and jobs
currently owes Government

assets
better to save
spending this year
£1821bn
– Can reduce activities which
harm the environment or is predicted to be
ourselves like carbon
emissions or smoking Assets are things of value which are controlled
£841bn
T?
by somebody. Governments have assets ranging

W H A from land to property to roads to railways to

gold and money, and they can provide a source
of income through being rented or sold.
What is consumption and how
ECONOMY’S MANIFESTO What’s the difference between
is it different from investment?
When economists talk about spending, including
All communication around the economy should: government and personal debt? government spending they often split it into things
What do we mean by net debt Governments don’t go bankrupt like people do.
that provide benefits now (consumption) and things
1) Be clear and understandable, with jargon that provide benefits later (investment).
and net worth? They can be in debt forever because it can be paid
limited and explained for by future taxes and the creation of money (see top
Net worth is the wealth you (or a government, or a company) left). The risk is that people could lose confidence in
2) Scrutinise arguments and evidence, because have if you add up all your assets and minus all you debts. the government and value of the pound.
Net debt is how much more debt you have than cash to pay
there is no one right answer it with (assets that can’t easily be turned into cash don’t count).
This election both the Conservatives and Labour have said
3) Be a conversation everyone is part of they will focus more on building up net worth.

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Figures come from the Institute of Fiscal Studies (IFS), a respected and independent research body, and the ecnmy.org
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of advancing education in economics for the public benefit provides independent analysis of the public finances. We’ve also checked this poster with experts from a
range of political viewpoints to make sure that it is as unbiased as possible!