BRITAIN'S £130BN TAX BOMBSHELL

Treasury revenue will be ‘devastated by pandemic’

- Sarah O’Grady

THE Treasury is set to lose up to £130billion in taxes due to the Covid-19 crisis as experts warn of “a recession to end all recessions”.

The blow – calculated for this fiscal year after businesses were shuttered and many were left unable to work – is more than the Government is spending on propping up the economy.

As the UK death toll hit 33,186 yesterday, Chancellor Rishi Sunak admitted we are “very likely” already in the middle of a “significant recession”.

But Paul Johnson, director at the Institute of Fiscal Studies, warned that we are facing major turmoil. He said: “It is a mega-recession. It is a recession to end all recessions, in terms of its scale. It’s just a very different kind of one to ones we have had in the past because it resulted from a different thing, a pandemic. It has resulted from a different response, Government closing part of the economy down.

“And it should result in a different route out and we hope a faster route out. But we cannot know that it will be a faster route out.”

Carsten Jung, an economist at the IPPR think tank and a former Bank of England official, added: “The lion’s share of the cost of dealing with Covid-19 will be the lost tax. The tax loss is more than is spent in additional support to the economy.

“The final amount depends on the economic scenario.

“It depends on how quickly businesses bounce back and consumers start to spend.

“Also, how fast demand picks up for products and if people have jobs in coming months.”