Machiavelli
Well-known member
The lockdown measures look as though they'll lead to the sharpest decline in economic activity since WW2. Below is the OBR's projection which involves assumptions about the length of the lockdown. My key question is who is going to pay for the debt in the longer term (ie when the government has to start paying it back)?
Coronavirus lockdown could shrink GDP by 35% and see unemployment rise by 2m, says OBR
Here is an excerpt from the report published by the Office for Budget Responsibility today looking at what impact the coronavirus lockdown could have on the economy. It says GDP could fall by 35% in the second quarter of the year.
Here is an extract.
In addition to its impact on public health, the coronavirus outbreak will substantially raise public sector net borrowing and debt, primarily reflecting economic disruption. The government’s policy response will also have substantial direct budgetary costs, but the measures should help limit the long-term damage to the economy and public finances – the costs of inaction would certainly have been higher ...
We do not attempt to predict how long the economic lockdown will last – that is a matter for the government, informed by medical advice. But, to illustrate some of the potential fiscal effects, we assume a three-month lockdown due to public health restrictions followed by another three-month period when they are partially lifted. For now, we assume no lasting economic hit.
Real GDP falls 35 per cent in the second quarter, but bounces back quickly. Unemployment rises by more than 2 million to 10 per cent in the second quarter, but then declines more slowly than GDP recovers. Policy measures support households and companies’ finances through the shock.
Public sector net borrowing increases by £218 billion in 2020-21 relative to our March budget forecast (to reach £273 billion or 14 per cent of GDP), before falling back close to forecast in the medium term. That would be the largest single-year deficit since the Second World War.
Coronavirus lockdown could shrink GDP by 35% and see unemployment rise by 2m, says OBR
Here is an excerpt from the report published by the Office for Budget Responsibility today looking at what impact the coronavirus lockdown could have on the economy. It says GDP could fall by 35% in the second quarter of the year.
Here is an extract.
In addition to its impact on public health, the coronavirus outbreak will substantially raise public sector net borrowing and debt, primarily reflecting economic disruption. The government’s policy response will also have substantial direct budgetary costs, but the measures should help limit the long-term damage to the economy and public finances – the costs of inaction would certainly have been higher ...
We do not attempt to predict how long the economic lockdown will last – that is a matter for the government, informed by medical advice. But, to illustrate some of the potential fiscal effects, we assume a three-month lockdown due to public health restrictions followed by another three-month period when they are partially lifted. For now, we assume no lasting economic hit.
Real GDP falls 35 per cent in the second quarter, but bounces back quickly. Unemployment rises by more than 2 million to 10 per cent in the second quarter, but then declines more slowly than GDP recovers. Policy measures support households and companies’ finances through the shock.
Public sector net borrowing increases by £218 billion in 2020-21 relative to our March budget forecast (to reach £273 billion or 14 per cent of GDP), before falling back close to forecast in the medium term. That would be the largest single-year deficit since the Second World War.