The U.K. government now estimates its losses from the pandemic could hit 23 billion pounds (about $30 billion), Bloomberg reported, coming from loans used to help businesses affected by the crisis.
In the annual Department for Business, Energy & Industrial Strategy report, the best-case scenario would be around 13 billion pounds (about $17 billion), according to Bloomberg. Both estimates come from loss ranges based on history, from similar prior programs, combining credit and fraud losses.
Combined, the financial aid from Britain's Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Bounce Back Loan program have doled out around 50 billion pounds (about $65 billion) in loans, according to Bloomberg.
The U.K. government has guaranteed 80 percent of the CBILS and CLBILS loans and all of the lending from Bounce Back, Bloomberg reported. The government has now also started an audit of the loans.
The U.K. economy isn't doing well in general, with retail employment down 45 percent since May — the sharpest downturn since the Great Recession, according to data from the Confederation of British Industry (CBI).
That comes with U.K. internet sales on the rise as consumers switch to digital shopping, as has happened in many other parts of the world since the pandemic. This switch caused a 6 percent drop in retail sales for the year up to August, with traffic down 60 percent in June alone, PYMNTS reported. And CBI lead economist Alpesh Paleja said the government's furlough scheme, while helpful, could just be delaying more layoffs in the future if no further financial aid is provided or relief extended.
To help bolster sales, the U.K.’s Eat Out to Help Out campaign attempted to get people to go out to eat via a 50 percent discount paid back by the Treasury. It was successful early in August, but the discounts will cost the taxpayers around 500 million pounds (about $646 million), alongside the government's other decision to cut the value-added tax rate from 20 percent to 5 percent on hospitality, accommodations and attractions. That decision, in place through January, will cost another 2.5 billion pounds (about $3.2 billion).