Trending:

The true financial cost of COVID

By Charlie Loran • Published: 29 Oct 2020 • 8:37

Many parts of the UK and Spain are now facing further restrictions as the second wave of coronavirus infections continues to rise, but what is the financial cost of COVID?

These new restrictions will force the governments to spend even more money on measures to support local economies.

So how much is it all going to cost?

We won’t know how big the final bill will be until after the crisis is over. But the government will certainly have to borrow enormous amounts of money.

According to the Office for Budget Responsibility (OBR), which keeps tabs on government spending, the UK  government would have to borrow £372bn for the current financial year (April 2020 to April 2021).

And that’s before the cost of new lockdowns and support measures announced in the autumn are considered.

To put it into context, before the crisis, the government was expecting to borrow about £55bn for the whole financial year, but it has already borrowed £208.5bn so far this year.

The government will also raise less tax than it hoped because of the crisis. Unemployed or furloughed workers pay less income tax, businesses pay less tax if their profits are lower, and shoppers pay less VAT if they buy less.

So the government will be bringing in less money in taxes than it expected and spending more to support people and the economy.

That will leave it with a gap between its spending plans, and the money coming in to pay for them – that’s known as the deficit.

The deficit leaves the government with a choice: increase borrowing, raise taxes, or cut spending. In the end, it may well do a mixture of the three – but those decisions haven’t been taken yet

By the end of World War II Britain had amassed an immense debt of £21 billion. Much of this was held in foreign hands, with around £3.4 billion being owed overseas (mainly to creditors in the United States). On 31 December 2006, Britain made a final payment of about $83m (£45.5m) and thereby discharged the last of its war loans from the US from 1945.

This means it will likely be our great-great-grandchildren who are paying off the debt of the COVID-19 Crisis in many years to come.

Thank you for taking the time to read this news article “name of article”. For more UK daily news, Spanish daily news and Global news stories, visit the Euro Weekly News home page.

Author badge placeholder
Written by

Charlie Loran

Manchester born mummy with a two year old diva (2020), living on the Costa del Sol for just short of a decade.
Former chef and restaurateur, holistic health fanatic and lover of long words.

Share your story with us by emailing newsdesk@euroweeklynews.com, by calling +34 951 38 61 61 or by messaging our Facebook page www.facebook.com/EuroWeeklyNews

Comments

    • Herbert Lichtenwald

      29 October 2020 • 12:06

      COVID costs?
      completely wrong and stupid
      it must mean the costs that politicians have caused through unjustified measures
      if there was no test there would be no Covid

      of course you do not public this comment, because this newspaper spread panic in the interests of criminal governments

    Comments are closed.

Continue Reading