are directly affected by spending cuts or tax increases suffer as these changes carry consequences which negatively impact their interests. As a result, there tends to be outcry and disapproval from the sector in which the government has chosen to make the cuts. In the most recent UK budget (March 2016), the case of the disability cuts provided large scale disgust with many questioning the morality of the government. It could also be argued, as briefly mentioned before, that the decisions regarding where to make fiscal policy changes could be influenced by political intentions rather than doing what is best for the country; also known as public choice theory. Ultimately, austerity, like all political decisions, would have both positive and negative spill over effects onto third parties. However, in order to gain a clear insight into whether austerity can be justified, one must understand whether the benefits of doing so outweigh the costs. It is widely agreed that austerity is the best if not the only measure of reducing a government budget deficit. Therefore, one could argue that, for this reason alone, there are no qualms to its implementation. Nonetheless, many feel that the risk of worsening the economy and rendering parts of the nation worse off is too high a risk to pursue this policy. Personally, I feel that the use of austerity in order to balance the budget is justifiable. This is purely because, in the event of a recession in the United Kingdom, the base rate is too low so reducing interest rates will not have an effect and with a budget deficit it is almost impossible to spend our way out. I would, though, still like to see some minute improvements in the decisions as to where cuts and tax increases are made as I feel that politicians are swayed too often by the prospect of gaining or losing votes. Should we stay or should we go? The EU referendum is going to change the UK economy for the better or worse. With George Osbourne saying the UK will plunge into a recession if we leave (BBC, 2016) and politicians such as Boris Johnson and Justice Secretary Michael Gove saying that we could boost the NHS by £100 million a week if we left the EU (NHS BBC, 2016), it is hard to know for sure what the best decision is. One of the big debates about staying in the EU is to do with immigration. Some people see immigrants as competition for jobs and public services while business owners may see immigrants as cheaper labour. In addition, the fiscal contribution of immigrants is always debated. It was seen that between 1995 and 2011, immigrants made a positive net contribution of £4 billion to the UK budget balance (Economist, 2014). Immigration can also have many other benefits for economies and of course the refugees are likely to benefit from a higher standard of living. The terms refugee, immigrant and asylum seeker are often used as the same thing. But there are some key differences. A refugee is a person who has been forced to escape their country because of war, persecution or natural disaster. An immigrant is a person who comes to live permanently from a foreign country for many reasons. An asylum seeker is a person who has left their home country as a political refugee and is seeking asylum in another. Immigration has several benefits for economies that most people don’t realise. When Immigrants come in, a country has a bigger workforce meaning supply of labour increases. Due to the market mechanism, this brings down the level of nominal wages and reduces costs for firms. For example, in 2015, the Bank of England reported that wages in the semi-skilled/unskilled sector decreased by 2% due to the influx of immigrants (Green, 2016). Since firms’ costs have reduced, they can spend more of their profits on investment in capital __________________________________________________________________________________________ Is immigration beneficial for refugees and the economies they come to? S ELVIN S ELBARAJU
37
Made with FlippingBook Annual report