Will Rishi Sunak's temporary nationalisation of the economy rescue us? writes Robert Peston

There are three big themes to Rishi Sunak's huge emergency rescue package for the economy.

First that it is now irrational for any business that is facing a collapse in revenues stemming from coronavirus to sack rather than "furlough" or rest employees - since the Government is dispensing many tens of billions of pounds (on an annualised basis) to subsidise wages up to £2500 a month.

Only a business owner with no faith in the future would fire his or her people in those circumstances.

Second, by granting an extra year to pay this quarter's VAT and seven months to pay the second income-tax instalment to small businesses - and the self-employed - the Chancellor is in effect giving interest free loans (of many tens of billions of pounds) to them.

This should allow small employers to pay wages until the new furlough subsidies kick in.

Finally, Sunak is dealing much more generously with the employed, self-employed and unemployed whose earnings collapse.

He's doubling the amount that can be claimed to cover rents through the Universal Credit system, and increasing the "base rate" payment of Universal Credit bv £1,000 per annum.

London's transport network is running a reduced service amid the outbreak. Credit: PA

What will all this temporary nationalisation of the private sector cost?

Well if the economy is knackered by Covid-19 for a year or so - which seems likely on the basis of the medical boffins' forecasts - the bill to the taxpayer would be a minimum of £60bn, or around 3 per cent of our national income, but could potentially be much much higher.

Which is at least twice the stimulus of last week's budget, and a multiple of the grants offered to businesses a few days ago.

On Thursday the Bank of England announced an interest rate cut to a record-low 0.1%. Credit: PA

As a consequence the national debt will increase very substantially.

But don't fret too much - for now. Given that only yesterday the Bank of England said it would be buying a further £200bn of Government debt, as part of its quantitative easing programme.

So the huge new deficit is in effect being financed by money creation.

Coronavirus information on the window of a Boots pharmacy. Credit: PA

The bigger question is how much good it will do.

And the answer is some good.

But there is no avoiding a very significant hit to the economy and all our earnings, almost certainly the biggest hit to our prosperity since the 1930s.

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