Who’s paying for Coronavirus?

Who’s paying for Coronavirus?

As it turns out, shutting down the vast majority of your economy whilst ordering your entire population to stay indoors is an eye wateringly costly measure to take to stop a pandemic.

Nobody’s here to argue the merits or otherwise of a national lockdown and whether it’s a viable long-term solution to Coronavirus, but it can be said without question that it costs an awful lot of money to enact and see through.

That’s probably why a number of European leaders, including Prime Minister Boris Johnson, have recently said they won’t put another lockdown in force in order to control the virus should a second wave hit.

Most countries are now enacting local track and trace programmes and localised lockdowns should there be flare ups in certain areas. More recently this has been the case in Leicester and Greater Manchester, where in Leicester bars and pubs have been delayed from opening, and in Manchester households have been told not to mix indoors.

One thing an economy requires as a prerequisite to succeed is demand, and the easiest way to remove economic demand is to lock everybody up and shut all retail and services down.

According to the BBC, lockdown and wider Coronavirus measures may cost the UK economy something in the region of £300 billion. According to the piece ‘To put it into context: before the crisis, the government was expecting to borrow about £55bn for the whole financial year, but it borrowed more than £100bn in the first two months alone.’

The question we now need to ask is who is going to pay for this?

Capital Gains Tax

There have been rumours brewing that the chancellor Rishi Sunak may be planning to raise Capital Gains Tax in the next budget in order to try and balance the government books following an absolutely enormous bill off the back of paying for the pandemic.

The Guardian have reported that Sunak is planning a tax hike against wealthy investors and businesspeople to claw back some of the eye watering money the government has been forced to spend so far.

In it they said ‘Rishi Sunak surprised backbench Tory MPs after he ordered the examination of the main tax on asset sales, which reaps billions of pounds for the exchequer each year on the sale of second homes, works of art and stocks and shares.’

There is, however, a wide expectation that anything that could harm the property market recovery will be stayed away from altogether, as property price growth, rental growth and demand are driving an economic recovery as it stands.

With the recent announcements that stamp duty has been temporarily stopped until next year, and other measures such as Help to Buy being extended, there seems to be an understanding from the government that property is going to be required to help any sort of V-shaped recovery.

It may mean that the time to purchase a property, or to expand your portfolio, could well be now whilst the government are looking for you to spearhead an economic boom.

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