Rishi Sunak launched Eat Out to Help Out in summer 2020 as lockdown restrictions were eased and the Government wanted to stimulate the economy. However, while the scheme worked for its original purpose, many blamed it for a spike in coronavirus cases which may have led to the strict rules the UK is now facing.
On top of this, the scheme will likely end up being costly as the Government will be left covering the debt associated with the scheme which ultimately will have to be the burden of British taxpayers.
Many expect the Chancellor to address Government spending in his upcoming budget, with Rishi set to lay out how the state will cover coronavirus themed debt going forward.
There may also be new announcements on additional support packages and Darren Moore, the Group Commercial Director at TaxAssist Accountants, predicted businesses will be offered more support for the spring: “Our recovery will be business led and we expect to see incentives put in place to encourage investment, employment and consumer spend.
“The Eat Out to Help Out scheme last summer was an example of an innovative plan to stimulate much needed consumer demand in the hospitality sector.
Much of the Government’s support efforts have been focused on small businesses and sole traders, with multiple plans launched such as bounce back loans and the self-Employment Income Support Scheme.
While many benefited from this, as the SME sector was amongst the hardest hit by the pandemic, Darren argued more decisive action needs to be taken moving forward: “Small businesses have relied heavily on Government-backed funding schemes such as Bounce Back Loans and Coronavirus Business Interruption Loans through the pandemic.
“The sector will now have to manage this unprecedented level of debt.
“We have to move away from this level of dependency, drive entrepreneurial behaviour and support individuals who invest in existing and new businesses.
“We hope to see further tax incentives to encourage this type of investment, particularly in the small business sector.
“This could be done alongside Government, perhaps with some form of underlying central support or protection.
“We also expect to see further measures to encourage capital investment by businesses through enhanced capital allowances, particularly for energy efficient projects.”
While it remains to be seen what the Chancellor will announce come March 3, the Government detailed the budget will “set out the next phase of the plan to tackle the virus and protect jobs and will be published alongside the latest forecasts from the Office for Budget Responsibility (OBR).”
Pressure to tackle public debt will be hard to ignore, with the ONS reporting in December that public sector net borrowing was estimated to reach £31.6billion in November 2020, £26billion more than what was recorded the year before.
This was the highest November borrowing on record and the third-highest borrowing in any month since records began in 1993.
Overall, public sector debt rose by around £301.6billion throughout 2020, taking the total debt to £2,009.8 billion at the end of November.
This equates to 99.5 percent of GDP and is the highest debt to GDP ratio since 1962.
Throughout the pandemic, Rishi has often detailed he would do “whatever it takes” to keep the economy going but he has also noted these debt levels are unsustainable and they must be addressed at some point.
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Published at Sat, 23 Jan 2021 04:00:00 +0000