Cuts and tax hikes to fund the £192billion crisis fightback will bring a second round of austerity, spending watchdogs warn.
Unemployment could more than triple to over four million, with one in eight workers losing their job in the wake of the pandemic.
Wages could fall more than 9% this year and house prices drop by almost 7%, the Office for Budget Responsibility said in a report yesterday.
It warned the nation’s debt will rise to £2.2trillion this financial year, more than the total value of everything the UK produces – rising to £2.4trillion next year and £2.6trillion in 2023/24.
It means the Tories will likely wield the axe again just as the UK recovers from the last round of cuts after the financial crisis, despite Boris Johnson ruling out a return to austerity.
The report said: “At some point it seems likely that there will be a need to raise tax revenues and/or reduce spending to put the public finances on a sustainable path.”
It forecast today’s 3.8% jobless rate would soar to 12% by the year’s end and could top 13% next year, leaving four million jobless – from 1.3million now – worse than the 3.2 million peak of the 1980s recession.
It also said up to 20% of the nine million workers furloughed under the Job Retention Scheme could lose their jobs.
The economy grew 1.8% in May, according to the Office for National Statistics, far less than the 5% predicted.
It left the economy nearly 25% smaller than in February.
Ian Stewart of Deloitte said: “It is likely to take years, not months, to repair the damage done by Covid-19.”
Chancellor Rishi Sunak said the Government’s £30bn jobs support package “put people’s livelihoods at the centre of our national renewal”.
