IT is quite clear that there will be a huge deficit in the UK economy in 2020 which in March was forecast as being £55 billion (€62 billion) and is now expected to be between £330 billion (€373 billion) and £500 billion (€565 billion).
Apart from just printing money ad infinitum, which is not the most sensible policy, the government is considering a number of new options to try to bring in the cash.
According to the Daily Telegraph, it has seen a Treasury document dated May 5 which states that in order to generate the necessary funding it would need to break a number of the manifesto promises it made prior to last year’s election success.
It goes on to suggest that it may be necessary to increase tax in one form or another, probably Income Tax or VAT, impose a two year public sector pay freeze and curb pension rises.
This will come as a shock if true, especially to pensioners who have enjoyed a triple lock on pensions since 2011 which means that there is a guarantee that the basic state pension will rise by a minimum of either 2.5 per cent, the rate of inflation or average earnings growth, whichever is largest.
Many who retired to Spain have seen the value of their pension decrease due to the poor performance of the pound against the euro and any further diminution of their purchasing power could make life even harder.
Government Minister Grant Shapps told the BBC Radio 4 Today programme that he didn’t recognise the figures being quoted but that the government was looking at how, with careful management, it could ensure that the economy recovered.
In the meantime, the Labour Party (whose new head, Sir Keir Starmer, has just narrowly beaten Boris Johnson in a YouGov poll as a more trustworthy leader) has appealed to the PM and Chancellor Rishi Sunak to reject public sector spending cuts as a way of paying off the cost of the pandemic.