Economicscalendar_todayLast updated: Apr 2026
What is Fiscal Policy?
/ˈfɪskəl ˈpɒlɪsi/
Fiscal policy is how governments use taxation and public spending to influence the economy. Raising taxes or cutting spending slows the economy; cutting taxes or increasing spending stimulates it.
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Everyday Example
When a government announces a £50bn infrastructure programme during a recession, it is using expansionary fiscal policy to create jobs and boost demand.
publicReal-World Application
“The US government's £2 trillion COVID-19 stimulus package in 2020 was one of the largest single fiscal interventions in history.”
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Did you know?
Fiscal policy became politically dominant in the 1930s when John Maynard Keynes argued that government spending could pull economies out of depression.
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Key Insight
Fiscal and monetary policy are the two main tools for managing an economy — governments control the first, central banks control the second.
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