Fiscal policy

Fiscal policy includes any measure that the national government takes to influence the economy by budgetary means, such as increasing or decreasing public spending and taxes. Both fiscal and monetary policy can be used to influence the economy’s short-term performance.

Low interest rates or taxes, for example, might stimulate short-term growth in the economy, while trimming spending and increasing government revenues via tax rises tends to dampen growth. However, there can be long delays between policy decisions and any visible impact on the economy, and stimulative or restrictive policies can also be self-defeating in the long run if they are applied persistently and indiscriminately.

The government’s job is to combine fiscal and monetary policies in such a way that they will foster steady growth but avoid inflation.

MoneyWeek magazine

Latest issue:

Magazine cover
Cheaper oil

Who benefits?

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Vote in the MoneyWeek Readers' Choice Awards

Vote for your favourite financial services companies in the inaugural MoneyWeek Awards, and you could win a year's subscription to MoneyWeek magazine. Find out more and vote here.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.