It is estimated that the UK government has already spent in the region of £123 billion in its fight against coronavirus.
According to the Office for Budget Responsibility, or OBR, spending between April 2020 and April 2021 may amount to nearly £300 billion. Yet it is thought that many in government believe the final bill will be much higher. To place this estimate in context, prior to the COVID-19 outbreak, the government was expecting to borrow just £55 billion.
One of the most expensive aspects of the government’s coronavirus support plan is the popular job retention package. The furlough scheme, which covers 80% of an employee’s usual monthly wage, is currently being accessed by over 7.5 million people in the United Kingdom. The job retention scheme alone is expected to cost over £120 billion, according to the OBR.
With consumer expenditure grinding to a halt, businesses who rely directly on customer spending are faced with an uncertain future. Such strict social distancing measures have had a crushing impact upon British businesses, leaving 1 in 10 now believing that they face a high risk of bankruptcy. Latest research suggests that 600,000 small UK businesses could fail by the end of 2020. This is equivalent to 1,700 businesses per day.
Behind these figures are people and families. All desperately concerned about their livelihoods, and their future.
How will this affect me?
The UK has not seen government spending like this in peace time. This colossal deficit must now be repaid, yet how the government intend to do this remains unclear. In the months and years ahead, we may see an increase in borrowing, raised taxes, or spending cuts. With a deep recession now expected, we face a rocky road ahead. Wage freezes, loss of jobs and public service cuts – the possibilities are innumerable, and all unwelcome.
A global picture
Authorities across the globe have spent millions in an attempt to avoid economic collapse. Banks across the world have cut interest rates and introduced wide and varied support packages to provide support and relief. The Asian Development Bank, or ADB, believes that the coronavirus pandemic could cost the global economy between £4.7 to £7.1 trillion.
The outbreak of COVID-19 has even shattered the world’s largest economy. Lockdowns across America have caused a 4.8% annual drop in economic spending. The worst in more than a decade. Unemployment benefits jumped by almost 3 million earlier this month. Meaning nearly 25% of the US workforce are currently claiming benefit support. With unemployment figures rising by the day, America now faces an agonising economic recovery.
A personal thank you
The team here at Cobra have remained in awe of the heroic efforts of all of our frontline workers, especially those in the national health service. We would like to take this opportunity to thank all those health professionals who have worked tirelessly to support our great nation during this pandemic.