On July 14 we will publish our latest Fiscal sustainability report, focusing on the impact of the coronavirus outbreak. This will present three alternative scenarios for the economy and the public finances over the medium-term, an assessment of their implications for fiscal sustainability and a discussion of fiscal risks over the medium and long-term.
The medium-term scenarios will take on board the roughly 25 per cent decline in GDP that we have seen in March and April and explore the fiscal implications of the speed of the subsequent recovery and the degree of long-term economic ‘scarring’. These will depend on the pace at which public health restrictions are lifted, the way in which individuals and businesses respond, and the effectiveness of policy measures to support incomes, provide finance and promote employment – none of which can be predicted with any confidence at this stage. The fiscal outlook will also depend on the cost of servicing government debt and on tax and spending policy choices.