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Explain one reason why the UK government may want to reduce a budget deficit
• To avoid further borrowing by government as borrowing will mean more interest has to be paid.
• To avoid inflationary consequences of deficit as too much government spending/taxes being too low may result in inflation.
• To prevent national debt rising as the debt interest will mean future tax rises or spending cuts in later years.
• To maintain credit rating which means lower interest rates on national debt.
• To prevent future tax rises which will be needed to pay off the deficit in future years. Note: This indicative content is not exhaustive, other creditworthy responses should be awarded marks as appropriate
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