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Coronavirus (COVID-19) - extending the Coronavirus Job Retention Scheme: analysis

Paper exploring the costs and benefits of extending the Coronavirus Job Retention Scheme on a temporary basis. Such an extension could reduce unemployment in Scotland by 61,000 through the first half of 2021, at a cost of around £850 million.


Introduction

The coronavirus pandemic has led to a significant contraction of economic activity and record levels of borrowing, as tax revenues have fallen and public spending has increased.

The Office for Budget Responsibility (OBR) estimates that the fiscal support provided by the UK Government to date will cost £192.3 billion, or around 10% of GDP, in 2020-21. This already exceeds the fiscal support provided at the height of the financial crisis in 2008-09 (0.6% of GDP in 2008-09 and 1.5% of GDP in 2009-10 respectively).

The Government’s employment support schemes for workers and the self-employed are the most costly element of the fiscal interventions, accounting for around a third of the costs, or around £62 billion (see Chart 1).

Chart 1. Estimated costs of UK Government fiscal measures in 2020-21 (as of 14 July)
Shows the estimated cost of various UK fiscal policies in response to COVID-19 in billions of pounds

Source: OBR

Contact

Email: OCEABusiness@gov.scot

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