The Office for Budget Responsibility (OBR) has published a Covid-19 reference scenario which demonstrates that the impact coronavirus will have on the economy is substantial.
The spread of the Coronavirus will raise public sector net borrowing and debt, primarily because of associated economic disruption. The Bank of England has also produced an illustrative forecast which makes clear the impact coronavirus is expected to have on the UK economy.
Over 1.5 million new claims have been made for Universal Credit, surveys suggest that a quarter of businesses have stopped trading, and over 6 million jobs have now been furloughed under the Job Retention Scheme.
The policy response will have substantial direct budgetary costs, but the measures that have been put in place to support businesses and individuals, including the self-employed, through this temporary crisis will prevent greater economic and fiscal damage in the long term. The immediate cost of this comprehensive support may be high, but the OBR says that it is confident that the cost of inaction would ultimately have been much greater.I share the anxiety local people have about the future, and it is clear that every business and job in Southport will not be saved, but I can assure you that I am working to do everything in my power to ensure that the Government protects people’s jobs and livelihoods so that this temporary economic shock does not translate into a protracted one.
If the productive capacity of the British economy is maintained by keeping as many people in their jobs as possible and by keeping businesses afloat, the economy can recover more quickly once the vital public health restrictions currently in place can be lifted.