Coronavirus to cost £192bn as UK heads for worst economic slump in 300 years
Coronavirus is set to cost the UK £192 billion as the Office for Budget Responsibility warned the country remains on track for its worst economic slump in 300 years.
The OBR expects the Chancellor's support programmes for the economy, bolstered by Chancellor Rishi Sunak's summer statement last week, to cost £192.3 billion - up from the £132.5 billion figure it forecast the previous month.
The OBR published the figure alongside a set of scenarios it had created to measure the potential hit to the economy and public finances over the medium term from COVID-19.
They suggested UK output could shrink by up to 14.3% this year, in the worst case, with the economy not recovering to pre-crisis levels until 2024.
Even under its most optimistic scenario, the OBR sees GDP declining by 10.6% this year - the worst performance for 300 years.
The central scenario saw 2020 output falling by 12.4%, with the jobless rate peaking at 11.4%. It currently stands at 3.9%.
Last month UK debt passed 100% of GDP for the first time since 1963 and the government broke records for monthly borrowing.
The OBR said that while the government was rightly focused on limiting the damage of the pandemic, it would eventually have to tackle the sky-high debt and budget deficits.
“It seems likely that there will be a need to raise tax revenues and/or reduce spending (as a share of national income) to put the public finances on a sustainable path,” the OBR said.
The OBR was set up by former Chancellor George Osborne in 2010 to provide an independent audit of public finances, with a focus on the sustainability and affordability of debt.
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