Page 5: Microeconomics
Microeconomics is concerned with the treatment of specific individual markets, products and types of organisations. Business people support Government policies that support the actions of individual business organisations and encourage them to be more efficient and compete more effectively.
In recent years many measures known as ‘supply-side’ economics have been introduced, designed to help organisations to compete more efficiently and raise their productivity. For example, the Government has recently introduced the following incentive tools:
- A new 10p corporation tax rate for small companies
- A £20 million venture capital challenge to finance early stage high technology businesses
- A new Research and Development tax credit to encourage small business investment in R&D
- Discounts for training courses such as computer literacy.
A key area of the role of HM Treasury is in advising the Chancellor of the Exchequer on the Government’s forward financial plan, which is known as the Budget. This sets out the Government’s income and expenditure plans. Income is raised through direct and indirect taxes levied upon firms and individuals and then spent upon goods and services such as health, education, transport and defence.
Budget 99 was used to meet the economic objective of high and stable levels of growth and employment. Through the creation of incentives, it encouraged a better deal for enterprise and investment as well as the creation of economic stability as a platform for sustainable growth.