In addition to its impact on public health and families’ wellbeing, the spread of the coronavirus and the public health restrictions put in place to limit it will raise the budget deficit and public debt significantly, reflecting both the associated economic disruption and the Government’s economic policy response designed to support incomes and minimise business failures to prevent greater economic damage. To that end, we produced a coronavirus reference scenario to assess the potential impact of the coronavirus on the economy and public finances on 14 April.

During this unusual period, we will endeavour to monitor the economic and fiscal impact of coronavirus and the economic, market and policy developments that will feed through to the official measures of the public finances. We will aim to bring together this latest information and will periodically add material to this page (see Coronavirus reference scenario introduction for more detail on our intended outputs). We will tweet from @obr_uk when we are going to do so.

We would be pleased to receive comments and questions to obr.enquiries@obr.uk.

  • 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, yesterday’s March GDP data, or the likelihood of greater persistence in the near-term downturn and some economic scarring in the medium term. We expect to say more about these issues and to update our economic and fiscal scenarios more fully in our forthcoming Fiscal sustainability report (assuming the normal July timetable can be maintained).

     

    • 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 £123 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 our most recent public finances forecast for the current year.

    Given the large shock to economy and public finances caused by the coronavirus lockdown, it is no longer meaningful to compare the latest data with our March 2020 Economic and fiscal outlook (EFO). Instead, this commentary compares the latest numbers to monthly profiles consistent with the coronavirus reference scenario that we published on this page.

    Budget deficit leaps to £62 billion in April 2020 alone

    PSF_220520_white_heroApril’s public finances data provide an initial taste of the fiscal hit from the coronavirus lockdown and Government support for individuals and businesses. Tax payments received by HMRC were down 42 per cent on the same month last year, while central government spending jumped 52 per cent. As a result, the budget deficit was the largest in any single month and greater than our Budget forecast for the full year.

     

     

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    Commentary on the public sector finances – April 2020

    This commentary compares the May 2020 Public sector finances release to monthly profiles consistent with the coronavirus reference scenario that we published on 14 April.

    22nd May 2020 – 146 kB

     

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