Nation’s debt and deficit ‘eye-watering’, Treasurer Josh Frydenberg warns

An economic update tomorrow is expected to unveil Australia’s worst budget outlook since World War II.

Australians should prepare to see “eye-watering numbers” on debt and deficit when Treasurer Josh Frydenberg reveals the worst budget black hole since World War II.

Mr Frydenberg will on Thursday provide an economic update, including unemployment rate forecasts.

“You will see eye watering numbers around debt and deficit,” Mr Frydenberg told Today.

“Numbers that Australians have never, ever seen before.

“That’s the harsh reality of this pandemic. The coronavirus has required the government to spend unprecedented amounts of money to support people in need.”

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Treasurer Josh Frydenberg says COVID-19 has brought with it great uncertainty. Picture: NCA NewsWire/Gary Ramage

The Federal Government had previously announced $260 billion, or 13.3 per cent of GDP, in support measures.

However, this week’s announcement to extend its JobKeeper program until March 2021 and coronavirus supplement until December comes with an additional $20 billion blow.

“Every dollar we spend is a borrowed dollar, and that’s why it will take some time to pay back the debt,” Mr Frydenberg said.

Revenue also took a “big hit”, worsening the budget bottom line, because business profits were slashed and unemployment soared due to coronavirus lockdowns.

Australia’s jobless rate was 7.4 per cent in June. However the effective unemployment rate, which includes people on zero hours and those who have left the workforce, stands at 11. 3 per cent.