coronavirus bailout worth hundreds of billions of pounds as economy grinds to a halt - WORLD IN FOCUS

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Tuesday, 17 March 2020

coronavirus bailout worth hundreds of billions of pounds as economy grinds to a halt

Utility bills and council tax could be SCRAPPED with the government GUARANTEEING firms income as part of 'wartime' coronavirus bailout worth hundreds of billions of pounds as economy grinds to a halt


Ministers are set to mount a desperate bid to stop coronavirus effectively sending the UK bust tonight - with hundreds of billions pumped into bailing out businesses and speculation utility bills and council tax could be scrapped. 
Government economists laid out the extraordinary options as Chancellor Rishi Sunak prepares to unveil a massive package of aid for those caught up in the chaos. 
The huge intervention comes after the US put forward its own $850billion plan to weather the storm ravaging the globe. offering to delay tax bills, bolster sick pay and supply emergency food. Every American could also be handed a $1,000 cheque to help keep the economy moving. 
The lockdown announced by Boris Johnson last night has sparked panic among businesses and fears millions could be made unemployed, while the self-employed and those in the 'gig' economy could also struggle to work.  
Venue owners have vented fury at the PM for not formally ordering them to close, saying that means they cannot claim on insurance.
A former adviser to George Osborne has suggested that the total commitment needed from the government could be as big as £450billion - roughly equivalent to 20 per cent of GDP. 
And giving evidence to MPs this morning, the government's own fiscal watchdog said ministers must now borrow huge sums to keep UK plc afloat.
They warned there could be a hit of over 5 per cent to the country's GDP, and 'wartime' level of response was needed. 
Office for Budget Responsibility chief Robert Chote suggested that paying firms to waive utility bills and ditching council tax could be a good way of helping the public. 
The experts also mooted the idea of guaranteeing businesses the same revenue this year as in the last 12 months.
Mr Chote said: 'This is not the time to be squeamish about one-off additions to public sector debt.
'It's more like a wartime situation - that this is money well spent.'
French President Emmanuel Macron last night declared 'war' on the coronavirus impact, announcing a £300billion fund and guaranteeing that no business in the country will go under as a result of the crisis. 
In the US, some politicians have been advocating so-called 'helicopter money' - cash handouts to the public to help keep the economy moving.   
Earlier, Phones 4u mogul John Caudwell warned that the chaos will cost the economy 'hundreds of billions of pounds, maybe trillions'.

Where would the money come from for a government bailout? 

Even before coronavirus hit, the UK's national debt was due to hit £2trillion by 2024-25. 
However, the crisis now looks set to force the government to underwrite huge sections of the economy to avoid collapse. 
That will mean enormous amounts of borrowing - potentially running into billions of pounds.
Fortunately - and counter-intuitively - there is high demand to lend to governments at the moment.
With stock markets in freefall, buying gilts from states is seen as a safe haven.  
In the very last resort, there is also the possibility of printing more money - although that could have disastrous impacts on inflation. 
Prime Minister Boris Johnson last night advised Britons to avoid pubs and clubs in a bid to control the spread of the virus. But venue owners have slammed the PM for not telling them to close
The car park at  East Midlands Designer Outlet, in Mansfield, was very sparsely populated today as shoppers apparently stayed at home

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