How to pay for Covid-19 is possibly the single most important political decision we will live to see and will frame policy for a generation. The crisis was a tragedy and it makes no moral, political, economic or financial sense to let the pandemic’s bills dictate fiscal policy in the short term. Fiscal austerity at this point would be foolish – a ‘second wave’ of destruction of our own making. The shadow of Covid-19 will be broad and long and escaping it will be a national endeavour and a multi-generational task.
- The Office for Budget Responsibility (OBR) will be tasked with identifying the aggregate excess public debt generated by the Covid-19 pandemic.
- To make sure this debt neither imposes a new era of austerity nor undermines Britain’s financial credibility, it will transfer this debt to a separate UK Covid 2080 Sinking Fund, which will pay the debt off over 60 years.
- Income from bonds issued within the UK Covid 2080 Sinking Fund will be tax-free for UK citizens.