I believe that a key challenge presented by the COVID-19 pandemic is the rising unemployment. We now have one of the highest unemployment figures, close to 1.7 million and rising every quarter since the commencement of 2020.
When we talk about people losing jobs in the hundreds of thousands, we need to realise that more often than not there are hundreds of thousand families affected behind these job losses. These results in adversities not just financially to all these people but mentally and physically as well, thereby adding to the strain of an already overworked healthcare system.
The Job Retention scheme has helped many people, but this is money we did not have in the first place, adding to the woes of the Treasury which is already at straining point. The result is increased borrowing, which in turn sends the economy on a downwards spiral. Our civil service is already trying to cope with the pandemic to the best of their abilities and the added pressure of Brexit only adds to the strain.
Our country relies heavily on the taxes that HMRC collects. But if millions are out of work, these are potential PAYE, self-assessment, NICs and other taxes lost and add to these the money doled out as benefits to help people sustain themselves, are all scenarios which are not conducive.
I would mention that the tax gap is widening, by which I mean the amount of money the country needs to fulfil its social and other obligations versus the revenues actually in the treasury pot.
The consequence of the rising unemployment is an increasing reliance on borrowings, which is not ideal in the long run for the economic rehabilitation of the country and not a solution in itself.