What is certain is that the cuts will reduce economic growth the government is fond of scaring us with numbers heres our own scary number the spending review will depress growth in the uk economy by 60 billion according to official figures thats 1000 for everyone in the uk so the best way to cut the deficit is to encourage growth. Other policies to reduce a trade deficit 1 supply side policies these policies aim to improve the productivity and competitiveness of the economy making uk exports more competitive and attractive this helps increase exports 2 deflationary fiscal policy this involves higher tax and lower government spending. That way we will not only lower the deficit but we will bring in enough revenue to invest in our economy and create the millions of new jobs we desperately need from both a moral and economic perspective we must not balance the budget on the elderly the children the sick working families and the most vulnerable. A weaker dollar would be good for the us economy but relinquishing the role as the dominant currency would reduce the power of the united states in global markets and the seigniorage profit earned tax capital inflows one of the reasons that the united states runs a trade deficit is because borrowing from abroad is cheap and easy. Policies to reduce a current account deficit involve devaluation of exchange rate make exports cheaper imports more expensive reduce domestic consumption and spending on imports eg tight fiscal policy higher taxes supply side policies to improve the competitiveness of domestic industry and exports
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