Most people would applaud the UK Government's willingness to step in and assist the business community with the various loans and (eg CBILS, CLBILS & Bounce Back) and furlough scheme.
Soon however, we must face up to the debt this has incurred. Conservatively the deficit will rise to £330 bn this year which is 500 % higher than 2019-20 and represents 17 % of GDP. The debt level should fall to 6 % within 3 years, assuming a period of calm ensues. However the loans made in 2020 will stay with us for up to 6 years before they expire.
Boris Johnson will do well to avoid the Cameron Government's mistakes of prolonged austerity tactics. Thankfully it seems that the mood is one of holding debt for the medium term rather than deep cuts into the economic and social muscle.
While he mulls over what to do with all this debt, the PM will have a mounting number of items in his in-tray:
- Kick start economic recovery in the UK
- Make good the Brexit promises of a prosperous future without the EU
- Invest in the UK regions to even up damaging disparities
- Reward the NHS and other key workers for their courage and dedication in weathering the COVID 19 storm
All of these will require further investment, so that £330 billion debt in likely to go up before we see it come down again.