In addition to the impact of the coronavirus outbreak on public health and families’ wellbeing, the associated economic disruption and the policy measures put in place to support individuals and businesses will raise the budget deficit and public debt significantly. We produced an initial illustrative coronavirus reference scenario to assess these effects on 14 April and will develop this scenario analysis further in our latest Fiscal sustainability report on 14 July.

During this unusual period, we are providing more frequent commentary on economic and fiscal developments, and the cost of the Government’s evolving policy response. New information is added periodically to this page and we will tweet from @obr_uk when we are going to do so.

  • Coronavirus reference scenario

    On 14 April we published a scenario that assesses the potential impact of the coronavirus on the economy and public finances.

    The table below summarises the results of our three-month lockdown scenario where economic activity would gradually return to normal over the subsequent three months. It also included initial broad-brush estimates of the costs of various policy interventions as they stood at the time. Further announcements have followed, adding new interventions and amending some existing ones. See the policy monitoring section of this page for a database tracking the coronavirus policy response.

    On 14 May we updated the fiscal results of the scenario for 2020-21, filling some gaps, refining some estimates and updating policy costings. We used these updated figures to construct monthly profiles through the year for various receipts and spending lines, as well as the main fiscal aggregates. This will provide some guidance as to whether future ONS data releases represent positive or negative surprises relative to the reference scenario.

    We have not revised the scenario to reflect the Government’s new conditional plan for easing the lockdown, the latest GDP and labour market data, or the likelihood of greater persistence in the near-term downturn and some economic scarring in the medium term.

    We will update our coronavirus scenario analysis on 14 July in our next Fiscal sustainability report. This will reflect the smaller-than-assumed peak-to-trough fall in GDP indicated by April’s GDP release and news in the public sector finances data to date (both of which are discussed in our June commentary on the public sector finances). From this updated starting point we will explore three economic scenarios:

    • one that updates our April reference scenario, with a sharp rebound in activity and no medium-term economic scarring;
    • one that sees activity recover more slowly and incorporates some scarring to potential GDP; and
    • one where recovery is slower still and scarring is deeper.

     

    • Monthly profiles
      14th May 2020
    • Initial assessment
      14th April 2020

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  • Policy monitoring

    The Government’s economic policy response to the coronavirus crisis provides support for individuals and businesses through grants, loans and guarantees. This will have substantial direct budgetary costs. But the measures are designed specifically to support the economy through this temporary shock and so they should help prevent greater economic and fiscal damage in the long term.

    The database below provides initial broad-brush estimates of the costs of various policy interventions. Its coverage is not yet complete and some estimates could be revised materially as administrative data on the use of different schemes are analysed. But on this provisional basis, we estimate that direct impact of new policy measures on cash borrowing in 2020-21 to be £132.6 billion. On the headline National Accounts basis, some of the impact may be accrued back to 2019-20.

     

    Previous versions:

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  • Data monitoring

    Every month the Office for National Statistics and the Treasury produce a joint statistical bulletin on the latest public finances data. On the same day we provide a brief analysis of the data, explaining how it should be interpreted in light of the monthly profiles consistent with the coronavirus reference scenario that are available on this page.

    • May commentary
      19th June 2020
    • April commentary
      22nd May 2020

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