Autumn budget - UK financials + budget deficits

https://embed.notionlytics.com/wt/ZXlKd1lXZGxTV1FpT2lJMU1XTTJNMkpoWmpBNE5EUTBOemd5WW1WbE9XRmlNakJoT1dJeE5tSmpNaUlzSW5kdmNtdHpjR0ZqWlZSeVlXTnJaWEpKWkNJNklqTmFhMGg1U1RWeU5FZFlWR1YwYUZsemNYcFhJbjA9

Greece 2013 austerity measures + loan from EU & IMF → to investors’ capital withdrawal from EU

Fiscal policy is one of the three pillars which rarely get noticed or given attention, I’m guilty of that too.

Hopefully, this will make you think otherwise about disregarding fiscal policy.

Firstly, let’s define what fiscal policy is in laymen's English.

Fiscal policy is the government’s approach to managing its budget and spending to achieve specific economic goals. Those goals? To promote economic growth, stability and full employment, pretty much in line with monetary policy, just a different route of doing so. Here’s how.

Fiscal policy involves the government deciding how much capital should be spent on different things within the economy, such as education, healthcare, and infrastructure and what rate taxes should be for individuals and companies. So to summarise, it’s the management of taxes and spending, simple.

In a recession when unemployment & inflation are high, apart from reducing interest rates the government might use fiscal policy to jolt the economy by increasing spending on public work projects and other initiatives that would create jobs and stimulate economic activity.

I heard this funny yet insightful view of the U.S. when listening to a macro audiobook which said, “Las Vegas is a levered version of the U.S., Vegas does boom and bust better than anyone, our economy feeds off of consumption and vegas is the place to consume. By studying Vegas you can see if the Fed is running things too hot or too cold

“How many cranes do you see, how much are hotel rooms, housing prices, more spending”

—a very interesting sight I must say (taken from “Fed Up by Colin Lancaster”)

Alright, alright I get it. How does fiscal policy affect fx and global markets?

Glad you asked!

Here are two short bullet points to answer that: