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.
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.
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