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Financial Expert: UK will be paying back coronavirus lifeline for a "very long time"
13 April 2020, 13:48
A financial analyst has cautioned the public that the government's economic support package will raise the national debt by billions.
Paul Johnson is Director at the Institute for Fiscal Studies and is an expert in public spending and finance. He joined Clive Bull to break down the economic impact of coronavirus.
Stemming from the possibility of a financial crash on the scale of the 2008 recession, Mr Johnson warned that the public will undoubtedly be paying back the government's financial lifeline "for generations to come".
"National debt will go up by hundreds of billions" Mr Johnson told Clive, stressing that the government will raise taxes and inflation in an effort to pay back the coronavirus package.
Clive wanted to know if there could be comparisons made between the 2008 recession and the economic instability seen through the Covid-19 crisis. The analyst insisted the two scenarios are completely different.
"There has been a shock much more quickly to jobs" during the coronavirus pandemic he began. Mr Johnson also noted that if lockdown is lifted soon then "there's a chance we will jump back reasonably quickly" down to an increased desire to spend.
Adding to the differences between 2008 and the coronavirus downturn, Mr Johnson told Clive that "we may be in for a much longer recession" because of the uncertainty around when the UK can get back to functioning close to normal.
Clive asked him whether we can expect the next Great Depression as a result of coronavirus. Mr Johnson told him that the world has "never experienced anything like this before" and that we cannot guess at this time what sort of economic situation we will come back into.
"One of the things that may happen is a big reduction in international trade" he pointed out, mainly down to a desire to turn inwards for many global economies. He suggested that global trade could go into reverse and this has the potential to lead to a recession on par with the Great Depression.
The financial analyst revealed to Clive that the UK will most certainly have to pay back the government's support package and believes that pay back will come in the form of higher taxes for a prolonged period.
Paul Johnson warned Clive that it is young people that will be affected worst economically by the coronavirus pandemic, noting that they will have to pay the bill for the support package for generations to come.