Budget Deficit

This occurs when there is a difference between an organisation’s income and its spend, with more flowing out than coming in.

It is typically used as a macro-economic description of the position of national governments, for example where taxation received is less than government spending. Without increased taxation or cut backs, it can only be managed by reducing reserves or increasing borrowing. Although the phrase is less common in business, the principle is applicable.

Budget deficit is a term normally found in financial management.

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