Why does the government need money ?
Government needs money to run its various departments, pay the government employees and provide its citizens goods and services such as hospitals, schools, social security, national defense, law enforcements, disability payments and unemployment support to name a few. Without these services and public goods it would be impossible to run a country.
How does the United Kingdom Government generate revenue ?
Main income source of the United Kingdom government is taxation. Corporate Taxes, Income Taxes, Value Added Taxes are few streams that generate revenue for the governments.
Why does the United Kingdom Government borrow money?
All governments like the United Kingdom have expenses. Like health, social security, education, defense, transport, public safety, social housing and care and so many more. These expenses become the budget collectively. When elected the elected government has the responsibility to deliver stability to its country in the present situation and climate with the financial plan they have in place.
If the inflation is manageable it is possible to fund the government’s expenses through taxes, however it is not always possible, when the budget increases they borrow, because they cant afford to accommodate all its expenses. Solutions that the governments have is either raise tax, borrow money or reduce spending. When it is difficult to increase taxes and not possible to reduce expenses the governments borrows money from the public or financial institutions.
What are the various ways the United Kingdom Government borrows money ?
The government of the United Kingdom borrows money from financial institutions like banks and pension companies. It raises its money by issuing bonds. A bond is an official paper given by the government to its investors, that conveys that the government has borrowed the money from them and that they will repay back the sum borrowed including the interest amount.
To read more on politics click this link
References:
https://ifs.org.uk/taxlab/taxlab-key-questions/what-does-government-spend-money
https://www.statista.com/statistics/282796/uk-government-borrowing/
https://ifs.org.uk/taxlab/taxlab-key-questions/where-does-government-get-its-money?tab=tab-313
