UNEMPLOYMENT may triple to 4million and the economy will not recover until 2024, the budget watchdog has warned.
The economy shrank by a quarter in the six months to May and Britain remains on course for its worst recession in 300 years, reports the Office for Budget Responsibility.
Chancellor Rishi Sunak is expected to borrow £322billion in response to coronavirus — a peacetime record — which will see the national debt soar to £2trillion, it added.
Official data shows the economy grew by 1.8 per cent in May as the lockdown started to ease.
But that was a ‘disappointing first step on the road to recovery’ and ‘suggests hopes of a rapid rebound are wide of the mark’, said Thomas Pugh, of Capital Economics.
The OBR report, which lays out best, worst and medium outcomes, warns ‘tax rises and/or spending cuts’ will be needed at ‘some point to put public finances on a sustainable path’.
The economy is on track to shrink by 12.4 per cent in 2020 and ‘elevated’ levels of unemployment and bankruptcies look highly likely, the watchdog said.
‘The pace of the recovery is highly uncertain’ and dependent on ‘the development of effective vaccines and treatments and the speed with which government can lift public health restrictions’, it concluded.
The predictions are based on the assumption that the UK will strike an EU trade deal by the end of the year — far from a certainty.
Labour’s Anneliese Dodds, the shadow chancellor, called for Mr Sunak to introduce a flexible job retention scheme for badly hit sectors.
She also said it was ‘vital’ that No.10 ‘focus on introducing a working test, track and isolate system to help build consumer confidence’.
Mr Sunak said the OBR figures ‘underline the scale of the challenge we face’ adding: ‘That’s why I set out our plan to protect, support and create jobs.’