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Economics vocabulary · Fiscal Policy and Public Finance

Budget deficit

Meaning in economics, with examples

/ˈbʌdʒɪt ˈdefɪsɪt/nounCore term

In economics, budget deficit means: The gap that appears when a government spends more than it collects in taxes and other revenue during a year; it is usually covered by borrowing.

In Turkish: bütçe açığı

How it is used

Usually reported as a share of GDP: a budget deficit of 3% of GDP. Deficits widen or narrow; governments cut, reduce or finance them. The opposite is a budget surplus. In the EU, a deficit limit of 3% of GDP is a well-known benchmark.

Example sentences

  1. The budget deficit widened to 4.5% of GDP as spending on pensions rose.

  2. To close the budget deficit, the government plans to raise taxes on tobacco and alcohol.

Common collocations

  • a widening budget deficit
  • narrow the budget deficit
  • finance a budget deficit
  • budget surplus
  • public debtThe total amount of money that a government owes to lenders at home and abroad, built up over years of borrowing.
  • fiscal policyThe government's decisions about taxes and public spending, used to influence demand, growth, jobs and the state of the public finances.
  • government spendingMoney that the state spends on public services, investment, salaries and social payments such as pensions; a key tool of fiscal policy.
  • taxationThe system by which a government collects money from people and businesses through taxes on income, profits, spending and property.
  • current account deficitA shortfall that arises when a country pays more to the rest of the world for goods, services, income and transfers than it receives.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Fiscal Policy and Public Finance

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This page explains English vocabulary for learners. It is not financial advice.