Government official forecaster says coronavirus economic shock worst in a 100 years, Robert Peston writes

There are times when an anticipated scenario is profoundly shocking, even when it says broadly what I would have expected.

The Office for Budget Responsibility commentary on the economic impact of Covid-19 crisis is one such - that's because the negative numbers it publishes are so big as to induce vertigo.

They include:

  • National income - or GDP - falling by 35% in the second quarter of this year

  • Unemployment rising by 2 million to a rate of 10% (worse than in the banking crisis)

  • Public sector net borrowing to be £273bn or 14% of GDP this year (a multiple of its rise in the banking crisis)

  • Income tax revenues falling by £57 billion

  • VAT falling by £30 billion

  • All public sector receipts dropping by £130 billion

  • The Coronavirus job retention scheme (the furlough scheme) costing £42 billion

  • The self-employed income support scheme costing £10 billion

  • The small business grant scheme costing £15 billion

  • The business rates package costing £13 billion

  • All such government decisions collectively costing just under £100 billion

It means that between March 2019 and the expected peak in March 2021, the national debt as a percentage of GDP will rise a staggering, almost unprecedented, 30 percentage points of GDP.

Over three years, this is equivalent to a rise in the national debt of £600bn.

To be clear, the OBR may well be erring on the side of optimism, because "for now" it is assuming no lasting economic hit, that the economy will recover relatively quickly when the the pandemic is under control and the lockdown measures are being eased.

This is an assumption that it accepts will have to be revisited.

PS. It would be remiss of me not to point out that the OBR expects this economic shock to be the sharpest and worst in the UK for 100 years

  • Chancellor Rishi Sunak said the report makes it clear the coronavirus outbreak "will have a very significant impact on our economy"