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HEAVY DUTY Coronavirus crisis could cost country £300billion and lead to tax hikes and pay freezes

HEAVY DUTY Coronavirus crisis could cost country £300billion and lead to tax hikes and pay freezes
THE coronavirus will cost the country an estimated £300billion and may require an increase in taxes and public sector pay freezes, according to Treasury documents.
The impact of the crisis could also bring about an end to the triple lock on state pensions and a two-year freeze on public sector pay.
The document, dated May 5, was drawn up by officials for Chancellor Rishi Sunak and labelled "Official – market sensitive", the Telegraph reported.
It said that, under the scenario considered most likely, the country's budget deficit this year would be £337billion, as opposed to the £55billion forecast in March's budget.
It projected that reducing the deficit again would require tax rises and spending cuts to raise between £25 and £30billion annual - the equivalent of a 5p increase in the basic rate of income tax.
Even the best-case scenario - which would see a deep but short dip in economic activity, described as "optimistic" by the Treasury - would produce a £209billion deficit this year.
The worst-case scenario would see the deficit rise to £516billion this financial year and the national debt rise by a total of £1.19trillion over the next five years.
That would require £90billion in annual tax rises and spending cuts to address.

TREASURY WANTS TO 'ENHANCE CREDIBILITY'

The chancellor could reportedly be set to announce the measures in a matter of weeks so as to "enhance credibility and boost investor confidence" in the UK economy.
Last night the Treasury dismissed the leak and said the document was just one of many put together by different policy teams to discuss "ideas" about future policy.
It added that it was too early to start considering spending cuts at this stage.
A spokesperson told the telegraph: "The Government's focus is on supporting families and businesses through this difficult period.
"That's why we announced an extension to the furlough scheme, which has already saved millions of jobs, earlier."
Today saw the chancellor announce that the current furlough arrangement - under which workers on leave receive 80 percent of their monthly pay up to £2,500 - would be extended until October.
Recent months have seen speculation that the crisis could prompt a return to the austerity of the Coalition years, where Boris Johnson's time as prime minister has so far been marked by large public spending pledges.
Today's leak comes after the government also announced a slight easing of lockdown measures, and urged any Brits not able to work from home to return to work.


 Boris Johnson has now urged Brits to return to work if they are unable to work from home
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Boris Johnson has now urged Brits to return to work if they are unable to work from homeCredit: Getty Images - Getty

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