The Centre for Policy Studies (CPS) has suggested that government borrowing may rise to £300 billion in 2020 as a result of the COVID-19 pandemic.
The think tank has been working to estimate the cost of the COVID-19 crisis to the government’s finances, and has incorporated official data from the Office for Budget Responsibility (OBR).
The CPS’s COVID-19 counter has put forward an estimated £127 billion in direct bailout costs and £119 million in indirect costs, such as lower tax revenue. The data is based on the OBR’s three-month lockdown scenario, followed by three months of ‘looser restrictions’.
The CPS stated that, when these estimated costs are added to the £55 billion of borrowing already forecast for 2020, a deficit of £301 billion is produced. This represents 15% of GDP.
Robert Colvile, Director of the CPS, said:
‘The government has acted throughout this crisis to save lives and protect livelihoods. But while it is clear to everyone that extraordinary times require extraordinary measures, they also incur extraordinary costs.
‘It is vital to get the most accurate possible picture of the burden the government is taking on in order to assess the full scale of the rebuilding that lies ahead.’