4.5.3

• Discretionary fiscal changes


  These are deliberate changes in direct and indirect taxation and government spending - for example, extra capital spending on roads or more resources into the NHS.
• Automatic stabilisers

  These are changes in tax revenues and government spending that come about automatically as an economy moves through the business cycle.
• Government borrowing and bond interest rates

  When a government borrows it issues debt in the form of bonds. The yield on a bond is the interest rate paid on state borrowing. Purchasers of British government bonds e.g. include pension funds, insurance companies and overseas investors. The percentage yield on sovereign (government) debt has been low in recent years for countries such as the UK and Germany but higher for nations such as Greece which has had several emergency bail-outs in recent times.
• What is government borrowing?

  Public sector borrowing is the amount the government must borrow each year to finance their spending in excess of taxation.
• What is national debt?

  Public sector debt is a measure of the accumulated national debt owned by the government sector.
• Public sector debt

  Public sector debt is owed by central and local government and also by state-owned corporations.