Keeping it financial for the moment - the UK gross domestic product was £2.2tn (trillion) in 2019. This is about £180bn per month.
Assuming the virus knocks out half the economy for three months this amounts to around £270bn. It is only half the economy as some bits - NHS, police, food, pharmaceuticals etc - are still working. And three months loss may be the average over a total duration of (say) nine months as lockdown is gradually relaxed.
Some parts of the economy will clearly fare worse than others - food may be bouyant, but pubs, restaurants and tourism may suffer most.
Some of the £270bn will be a one off loss this year, but much will simply need to be borrowed to fund current government "largesse". There will also be a longer term impact as I suspect unemployment will rise, certainly for a while, and personal behaviours may change radically as a result of the crisis - eg:
- work from home becomes embedded
- online shopping increases - ten years progress in 10 weeks?
- reduced commuting and travel
- changed personal values - home, family vs work, money
- video becomes commonplace - GP, accountant, solicitor, family, etc
Structural change like this will inevitably create winners, losers, opportunities etc and represents a big unknown at the moment.
So back to the original question - how will all this be paid for. There are around 30m people employed in the UK. So to repay borrowings of £270bn is around £9000 per head.
In a very simplistic way national economies have precisely the same characteristics as an individual. Very much more complex, and the capacity to affect 60m people in the UK, but not dissimilar.
So what does a normal person on a normal salary of (say) £24k pa after tax do if suddenly faced with a bill for £9000:
- my current income is all spoken for so I need to borrow some money
- I already have a mortgage and some loans/national debt
- can I sell any assets (classic car, coin collection etc)/ privatisation (of what)
- over what term and at what interest rate
- how do I cut current expenditure to enable repayments/austerity measures
- can I increase my income - change job/become internationally competitive
There is no easy or right answer for either an individual or a whole economy. Too fast and austerity may create rather than solve problems. To slow and our children will still be paying in 20 years time.
The solution to it all is to bring in that which we avoided at the outset - politics. The strategy adopted will inevitably impact differently in different groups - eg: elderly with pension concerns vs young with family commitments. This will be a political issue, are we all in it together, what takes priority - economy or public services or higher taxes.