[ad_1]
fake pictures
The cost of government efforts to combat the coronavirus pandemic has risen to £ 123.2 billion, according to the latest estimates by the government’s independent economic forecaster.
The previous estimate from the Office of Budgetary Responsibility was £ 103.7 billion. The increased cost of the government licensing plan is the main cause.
Now he expects annual loans to equal 15.2% of the UK economy.
That would be the highest from 22.1% seen at the end of World War II.
Additional spending has pushed the deficit identified for 2020-21 in the OBR benchmark scenario, which says it is not a formal forecast, above 15% in 1945-46, which included VE Day.
Loans for this year are estimated at £ 298 billion, an increase of £ 26 billion in the first attempt to calculate the impact of the pandemic a month ago.
This is mainly due to the additional costs of extending the license plan until the end of July.
The inclusion of the additional extension of a modified scheme through October could add an additional £ 20 billion, depending on the details of the scheme not yet announced.
What other costs are there?
The OBR also believes that taxpayers could end up paying a large bill for bad bank loans.
Some £ 5 billion in taxpayer costs from unpaid bank loans are included in this financial year.
An additional £ 1 billion has already been earmarked for the cost of welfare, primarily the claims spiral for Universal Credit.
The latest official OBR forecast in the Budget anticipated annual government loans of £ 55 billion, rather than £ 298 billion, says BBC economics editor Faisal Islam.
The difference in just two months, the result of the pandemic and the closings, is a £ 127 billion hit to the money the government receives, primarily expected tax revenue, and £ 119 billion in additional spending to support the economy during the year, adds our editor. .
Because it is important
As Paul Dales, UK chief economist at Capital Economics explains, additional spending is “fantastic good news” for ordinary people right now, because it means the government is paying many people’s wages when they might otherwise be fighting.
But he adds: “Beyond that, there is a point where people will have to start thinking, ‘How do we pay for all this?’
“It is then that it becomes relevant in a bad way later. We will have to pay for it, either by raising taxes or reducing expenses.”
“It is a two-step process. In the short term, it is helping people, but there will be consequences in the future.”
