The Budget Outcome §

Refers to the relationship between Government Revenue (T) and Government Spending (G).

• Balanced Budget (G=T) §

• Surplus Budget (T > G) §

• Deficit Budget (G > T) §

When does the budget outcome occur? §

Source

• Surplus Budgets, (T > G), or revenue is greater than spending, occurs when;

  • GDP growth is strong
  • Economy is close to Full Employment

• Deficit Budgets, (G > T), aka, spending is greater than revenue, occurs when;

  • GDP growth is slow, or;
  • Economy has contracted

Planned Budget is not the Actual budget §

The actual budget will always be different.

Various external unexpected factors can drastically or slightly change the actual budget outcome from the planned one, e.g.;

• Tax income being slightly lower causes more of a deficit
• An Untacipated upswing could result in a rising government revenues and lower welfare spending.

• Exogenous Factors (Economic Shocks) §

  • Ukraine War
  • COVID-19 Pandemic

• Why we went from deficit to surplus in 2022-23#econs-example

  The cash deficit for 2022-23 was much samller than expected as a result of low unemployment, which boosted income tax, and lowers social security expenses. Strong Commodity prices boosted tax revenue from mining companies as well, pushing us from our 134.2 billion 2020/21 to 32.0 billion in 2021/22.

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