Public spending on crisis soars again

Public spending on crisis soars again

Public spending on crisis soars again

Public spending on the battle against the effects of the coronavirus crisis has soared again after the chancellor announced a £30bn recovery plan in his statement on Wednesday.

According to figures released by the Treasury, public spending has now risen to almost £190bn.

This works out as nearly £3,000 for every person in the UK, which is more than the entire planned health budget for 2020-21.

It also means the cost of the crisis has risen by more than 40% since last month, when the Office for Budget Responsibility, (OBR) estimated it at £133bn.

This is likely to push the gap between what the government spends and what it raises in taxes, known as the deficit, above the OBR’s estimate of £300bn.

Prior to the coronavirus outbreak began, the government was expecting a deficit of £55bn.

Costs have included £15bn to buy personal protective equipment such as gloves and masks, and £10bn for the testing and tracing of infected persons.

Paul Johnson, director of the Institute for Fiscal Studies, told the BBC that the chancellor’s strategy is to spend money now, to minimise long-term damage to the economy.

He said:

“There is a huge public services additional spending that we didn’t really know about that was announced (on Wednesday).

“It was kind of skated over, but £15bn for PPE for frontline workers is an enormous sum.

“I don’t think the chancellor is desperately worried about the size of the deficit this year.

“What will concern him is the size of the deficit the year after, and the year after, and the year after that.”

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