Rishi Sunak

Coronavirus has brought large parts of the economy to a standstill, and the government has. billion to support employees, businesses and the NHS

So, where is come from all The Money goes?

It is still very early in The Crisis , so it is impossible to say how big The Final bill will get. It is as much as £298bn could no expenditure for this financial year (April 2020 to April 2021), (OBR), which keeps tabs on the state.

This is an absolutely enormous sum.

To put it in context: before The Crisis , the government was expected to borrow Around £55bn.

systems to support public services, businesses and individuals, such as Cost £123bn, the OBR estimates.

The government will also increase, less tax, as you hoped it to be. Unemployed or furloughed workers pay less Income Tax , companies pay less taxes when their profits are low, and buyers pay less VAT if you buy less.

The Final bill could be Even Higher . Leaked Treasury documents suggested That the figure this year could be as much as £337bn.

Even if the pandemic will be finished quickly, will lend the government more money in the coming years.

first of all, the government will borrow money from investors.

you could private individuals, companies, pension funds or foreign governments That give The Money to the British government, through the purchase of bonds.

A bond is A Promise to pay The Money back in The Future , and pay interest in the meantime.

to facilitate The Bank of England, which make the procurement of funds.

In the last few years, has to borrow, the government will be able to makes it easy with very low interest rates, the debt cheaper.

There is a limit to how much you can borrow, the government, before the interest payments are so large That they can't afford. No one knows where the limit is.

Even if the economy bounces back just as soon as the lockout is lifted, will it pay more debt, more interest.

But the fear of many commentators That The Recovery will take much longer than That .

So the government will bring in less money in taxes than expected, and spend more to support people and the economy.

leave That it comes with a gap between the spending plans, and The Money to pay for them - this is known as the deficit.

The deficit leaves the government with a choice: increase borrowing, raise taxes, or cut spending. In The End , it can't do well, a mixture of the Three , But the decisions have not been made yet.

Some economists argue That all costs of The Crisis could easily be covered by borrowing alone, But many do not agree.

the taxes would be politically delicate because of The Conservative Manifesto in 2019 promised not to increase the Three largest taxes. This is the Income Tax , social insurance and VAT which together account for More Than half of the revenue of the state.

the increase in taxes means people spend less, slowing the economy downhill. to shorten

expenditure, will also be difficult. There were great cuts in The Past ten years, and many of the easy savings have already been made.

Some areas have long been protected, such as health - reduce But it would be difficult to, the expenditure for health after a big pandemic.

the State pensions, another major expenditure item, protected by a system called "triple lock", which is a 2% increase guaranteed for at least each year. That was also guaranteed in the Manifesto.

to keep The Chancellor could say That the pandemic makes these promises impossible. But difficult decisions to be safely made.

If the taxes go up, people will soon realize That you will spend less money. Similarly, the people would notice if a lower level of expenditure has resulted in poorer public services, such as longer times in hospitals and less police waiting on The Streets .

But if the doctors and nurses have their wages frozen or benefits rise more slowly, That will be noticed by the concerned.

The government may feel That some of his ambitious infrastructure-planning, such as road and rail improvements That need to be moved or cancelled.

Source of news: bbc.com