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13 May 2020updated 06 Oct 2020 9:45am

Morning briefing: Tax hikes to foot the coronavirus bill?

By Samuel Horti

Good morning.

A leaked Treasury document suggests Chancellor Rishi Sunak may need to hike income tax, freeze public pay or end the pension triple-lock to foot the bill for the coronavirus pandemic. The document, obtained by the Telegraph, predicts the UK’s budget deficit will reach £337bn in 2020 – the March Budget predicted a £55bn deficit. Tax rises and spending cuts that raise up to £30bn could be required to fund the increased debt, and may be announced within weeks, the document says. In the worst-case scenario, the deficit will reach £516bn this year, requiring £90bn in cuts and tax rises, while the Treasury’s most “optimistic” scenario forecasts a £209bn deficit.

The news comes as the government officially lifts lockdown measures for the first time. From today, people can exercise outdoors as much as they want and meet a friend in the park, while those that cannot work from home are encouraged to resume their commute, avoiding public transport when possible. Scientists at University College London have said eight million people with underlying health issues should be exempt from the government’s back-to-work plans to avoid a deadly second spike of infections. In a new study published in the Lancet, they said people with conditions such as diabetes, obesity and heart problems – about a fifth of the working population – should stay home.

One set of businesses allowed to reopen today are estate agents, a move designed to kickstart the stalled housing market. Removal firms and conveyancers can return to business, show homes can open and councils can restart construction in residential areas in staggered shifts. Anyone buying a house can now view properties again, creating a bizarre situation whereby people can visit a strangers’ home, but not see their family. It is estimated that 450,000 buyers and renters have moving plans on hold.

Global updates:

Mexico: Mexico recorded 353 Covid-19 deaths on Tuesday, the largest daily rise in the country by far. The number is nearly 100 more than its previous record, seen last week.

New Zealand: New Zealand will today move into a “level two” alert from level three, allowing retail stores, restaurants, cinemas and public spaces to reopen. Mass gatherings are limited to 100 people. Funerals were supposed to be restricted to 10 people, but the government has amended its rules so that 50 mourners can gather.

Singapore: Singapore will test all 323,00 migrant workers living in cramped dormitories for coronavirus, authorities have announced. Infection numbers have spiked among the workers, fuelling a second wave of infections in the country.

Brazil: The country has recorded its highest daily death toll to date, with 881 new deaths. Infection numbers have now passed 177,000.

China: The city of Wuhan will test all of its 11 million residents, local media has reported.

India: Prime Minister Narendra Modi has announced a $270bn economic stimulus package for workers and small businesses, worth about 10 per cent of national GDP.

Europe: An uneven economic recovery from the pandemic would be an “existential threat” to the European Union, the bloc’s economic commissioner has said.

Read more on the New Statesman:

The 2 per cent fall in UK GDP shows why radical economic policy is needed

Rishi Sunak has extended the Coronavirus Job Retention Scheme – but it can’t last forever

It’s achieving growth, not paying off the debt, that will be difficult after Covid-19

Covid-19 has exposed the limits of the politics of individualism

Why Poland’s “ghost election” sends a warning about its democracy

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