Budget Formal

Budget Formal

Budget, a formal estimate of income and expenditure over a period; in business and government it usually includes an indication of the policy to be pursued to achieve stated objectives.

(1) In industry budgets are accounts drawn up in order to plan the financial, commercial and production policies of a business. They usually comprise, in addition to a master budget, a series of detailed or subsidiary budgets relating to sales, production, cash, capital expenditure, plant utilization, etc.

Budgetary control consists of the comparison of achieved results with budgeted results in order to ascertain or ensure that the objects of policy are achieved or to provide a basis for revision.

(2) The national budget is similar in nature to a business budget; it is an account of the past and future activities of the Government in financial terms. In the annual budget statement to the House of Commons the Chancellor of the Exchequer reviews the Government's income and expenditure for the past year, forecasts them for the coming year, and introduces changes in taxation needed to bring about the expected results and help achieve Government policy.

The budget provides two main pointers to Government policy: the expenditure side reflects policy on defence, the social services, subsidies, the nationalized industries, etc.; the revenue side reflects policy on taxation and the distribution of incomes. In all the budget is a convenient annual summary of fiscal policy and, when seen against a background of general economic policy, reflects in some degree the approach of the Government to economic problems in general.

The Financial Statement (commonly known as the Budget White Paper), which is available at the end of the Chancellor's speech, assembles all the figures relevant to his report. It sets out what is usually described as the budget proper: the figures of revenue and expenditure to 31st March of the previous financial year and the estimates of revenue for the succeeding financial year based on changes in taxation and other policies proposed and the corresponding estimates of expenditure.

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