The UK Influenza Pandemic Preparedness Strategy was published in 2011 and updated in 2014, alongside a review of the available medical and social countermeasures. As the situation develops, we’re updating our analysis of the UK economic impact regularly to help you with your response … The covid-19 pandemic is of course first and foremost a public health crisis, but its fiscal consequences will continue to make themselves felt for years – and more likely decades – to come. It is also attended by the Secretaries of State for DCMS, Transport, MHCLG, DIT and DWP, as well as senior officials from across Whitehall. A new Committee to address the economic and business issues presented by COVID-19 has met for the first time today. Given the scale of the economic hit, some part of them may crystallise in the future. It classifies measures in three categories: (1) immediate fiscal stimulus, (2) deferrals and (3) other liquidity and guarantee measures. In that period the public finance landscape has changed beyond recognition. Deferrals of VAT payments will at least delay receipt of £30 billion, and will put a fraction of that at risk. A deficit of over £200 billion in the coming financial year is well within the bounds of possibility. About 40% of that increase would result from new fiscal measures, and the rest from the economic downturn depressing revenues and adding to government spending. Many other advanced economies have also implemented large packages of support or are planning to do so. As a result the UK probably needs a larger bespoke package than some other countries. Sources: Economic impacts: author's calculations using Morgan Stanley, "UK Told to Stay at Home" (2020) and Office for Budget Responsibility, Tax and Spending Ready Reckoners (2019); job retention credit: IFS calculations using the Labour Force Survey; housing benefit: IFS calculations using TaxBen; other fiscal measures: HM Treasury. Coronavirus and the economic impacts on the UK: 21 May 2020. By the end of 2020–21, we will have much-elevated government debt. If the economy does shrink by around 5% this year these economic effects could likely add something like £70 billion (or 3.3% of national income) to government borrowing in the coming financial year. Coronavirus: A visual guide to the economic impact. This is already more than the dedicated UK fiscal response to the financial crisis, when the total UK fiscal stimulus package was 0.6% of GDP in 2008–09 and 1.5% of GDP in 2009–10. If it were taken up by 10% of private-sector workers for a period of three months, it could cost around ten billion pounds. Large increases borrowing are well-advised at the moment, to support households and reduce any long-term scarring effects in the economy. The economic damage from the COVID-19 pandemic is already tangible. A new Committee to address the economic and business issues presented by COVID-19 has met for the first time today. We know how concerned businesses are and are working around the clock to ensure they have access to the funding and support they need. A further piece setting out long-run scenarios for the public finances will follow in the coming weeks. All content is available under the Open Government Licence v3.0, except where otherwise stated, Department for Business, Energy & Industrial Strategy, Cabinet Committees and Implementation Taskforces membership list, It’s a national effort to win coronavirus fight, we all have crucial part to play, Prime Minister's statement on coronavirus (COVID-19): 12 March 2020, Coronavirus (COVID-19): guidance and support, Transparency and freedom of information releases, reimbursing small and medium-sized businesses for up to two weeks’ statutory sick pay for each employee absent due to COVID-19, extending business rates cuts so that 900,000 small businesses will pay no rates at all in 2020/21, to help them manage financial pressures created by COVID-19, providing £2.2 billion funding for one-off grants of £3,000 to around 700,000 small businesses and businesses, a new temporary Coronavirus Business Interruption Loan Scheme to be launched within weeks to support businesses to access £1bn of additional bank lending, a dedicated HMRC helpline to enable businesses in financial distress to discuss deferring tax bills where necessary, the Committee will continue to meet weekly, and more regularly as required. In addition, equity prices have fallen sharply, which can be expected to depress revenue from stamp duty on shares, capital gains tax and inheritance tax. Secretary of State for Business, Alok Sharma said: Businesses have a vital role to play in fighting the spread of the Coronavirus, from looking after the wellbeing of their employees, to keeping goods and services flowing wherever possible. Document as at 30 November 2020 Download Global portal. Broad consensus exists on the need to support households and Isabel Stockton, a research economist at the Institute for Fiscal Studies, said: “The response to the covid-19 pandemic has led to a sharp downturn in economic activity. While the initial economic impact of the outbreak was most significantly felt in the Chinese economy, this has quickly evolved to other countries and regions. Critical to this is the Scientific Pandemic Influenza Group on Modelling (SPI-M), which models the future epidemic and feeds into SAGE. A rough rule-of-thumb suggests that this effect alone could add around £70 billion (3.2% of national income) to borrowing in the coming financial year (although it is possible some of this will arise in the subsequent financial year). We use cookies to collect information about how you use GOV.UK. We use this information to make the website work as well as possible and improve government services. Chancellor of the Exchequer Rishi Sunak said: We are doing everything we can to keep this country, and our people, healthy and financially secure. Guardian readers lament Boris Johnson’s failure to grasp the scale of the crisis, which was … The Treasury and Bank of England are working closely together to support the economy through COVID-19. Don’t worry we won’t send you spam or share your email address with anyone. Today, the OBR published updated costings of the UK’s substantial package of fiscal measures in response to the coronavirus putting the amount of support at £123 billion. Lenin wrote that “There are decades where nothing happens; and there are weeks where decades happen”. There is a substantial chance that borrowing will turn out considerably more than this if the economic hit is greater or a large fraction of private sector employers take advantage of the employment retention scheme. COVID-19 has presented Scotland and the UK, as much of the world, with a twin health and economic crisis with a disproportionate impact on the most vulnerable in society. The Government has acted decisively in the national interest to support households and businesses and address the significant economic consequences of the Coronavirus. Prior pandemic response plans. In response, central banks in many countries, including the UK, slashed interest rates. The outlook is uncertain to say the least. Readings in April suggested the global economy was sailing into a colossal storm. the Chancellor met the new Governor of the Bank of England, Andrew Bailey, earlier this morning. The UN’s Framework for the Immediate Socio-Economic Response to the COVID 19 Crisis warns that “The COVID-19 pandemic is far more than a health crisis: it is affecting societies and economies at their core. Morgan Stanley forecast (on Monday March 23) that the UK economy will contract by 5% this year due to the impact of the pandemic, which would leave it more than 6% smaller than forecast in the Budget two weeks ago. It has one of the highest death rates per million, and the government’s initial response to Covid-19 was halting and contradictory. If more employers use the scheme, or for longer, it would of course cost proportionally more. Major economies including the UK, Italy and Spain have The government has also offered £330 billion of loan guarantees for businesses. I am having ongoing conversations with businesses from across different sectors and the government stands ready to provide the support that is required. But based on the information we have now, it would not be surprising if they were to add around £120 billion to borrowing, more than tripling the amount forecast just weeks ago and pushing borrowing up to £177 billion or 8% of national income. Even before considering the substantial fiscal package that the government has committed to mitigating its impact, this will depress government revenues and increase spending. As well as having serious implications for people’s health and the NHS, the coronavirus (COVID-19) pandemic continues to have a significant impact on businesses and the economy. Updated estimates of the cash-flow deficit of UK companies in a Covid-19 scenario -... // News // Financial Policy Committee (FPC) ... UK aid and Bank of England help developing countries to manage coronavirus economic shock Tough economic decisions will litter the road ahead once coronavirus crisis is over. An effective economic response to the Coronavirus in Europe 'Whatever it takes' needs to be the motto to preserve lives and reduce the impact on the economy of the epidemic. Economic Response to the Coronavirus The Coronavirus pandemic has presented a fast evolving and significant challenge to global health systems and economies. Transfers to provinces to finance Covid-19 response (Af 2.3 billion); Package to support agriculture (Af 5.9 billion) and short-term jobs (Af 1.0 billion). The measures announced by the Chancellor on Wednesday are on top of the measures the Bank of England is taking to free up an additional £190 billion for banks to lend to businesses, and a new £100 billion scheme to help ensure households and businesses – particularly small businesses – benefit from the reduction in interest rates to 0.25%. Yesterday’s announcement in parliament to increase the contingency fund for the coming financial year from £10.6 billion to £266 billion suggests the government may be prepared to go even further than that. Even at the, perhaps rather conservative, estimate in the table (for example the cost of the benefit increases will rise as the numbers claiming them increases sharply) and disregarding loans, guarantees and deferrals, the cost of which is unclear ex ante, the total package of additional spending would cost more than £50 billion, or 2.3% of GDP in 2020–21. A committee says the economic reaction to Covid-19 was rushed and the impact could be long-term. The Bank got the ball rolling at 7am by announcing an emergency cut in its policy rate on the morning of Budget day, from 0.75 per cent to 0.25 per cent. Before the impact of the pandemic, the Office for Budget Responsibility forecast borrowing to be £55 billion, or 2.4 per cent of national income in the coming financial year. It has also, rightly, prompted a substantial fiscal policy response, the cost of which will add directly to government borrowing. The Committee discussed government support for businesses affected by COVID-19, including urgent progress on delivering the £12 billion of measures to support businesses in last week’s Budget: The Chancellor updated the Committee on last Thursday’s meeting with financial services firms which agreed an additional £21 billion of lending capacity to firms. The Chancellor asked Cabinet Ministers to lead round tables with business groups, including in those sectors most directly affected. But as happened following the financial crisis, the changes in the public finance landscape that the outbreak has brought about will remain with us long after the immediate crisis has passed. In 2020 as a whole, the authorities envisage up to 2.9 percent of GDP pandemic-related spending, with about 15 percent directed to health. 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