COVID-19 UK: Britain faces biggest budget deficit since WW2

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COVID-19 UK: Britain faces biggest budget deficit since WW2
COVID-19 UK: Britain faces biggest budget deficit since WW2

The OBR’s lockdown scenarios are out – here’re the details, from Telegraph’s Tim Wallace:

The Government faces the biggest budget deficit since the Second World War as it ramps up spending and borrowing to battle the coronavirus and its economic effects.

Borrowing could surge to £273bn this year, equivalent to 14pc of GDP, according to the Office for Budget Responsibility – far outstripping the peak deficit of 10pc in the financial crisis.

Officials set out the scenario based on an estimate of what would happen if a three-month lockdown forced the economy to shrink by 35pc in the second quarter of the year, with unemployment up by 2m people – taking the rate to 10pc, up from less than 4pc.

These are unprecedented costs, but the OBR said it is worth borrowing to fund the fight.

“The measures are designed specifically to support individuals and businesses through this temporary shock and so they should help prevent greater economic and fiscal damage in the long term,” the spending watchdog said.

“The immediate cost of the Government’s actions may be high, but we can be confident that the cost of inaction would ultimately have been much higher.”

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