The cost of the coronavirus crisis is set to be even higher than first predicted, with government borrowing estimated to reach almost £300 billion.
New figures from the Office For Budget Responsibility estimate borrowing will be £25 billion higher than the spending watchdog predicted just a month ago.
Their latest figures suggest the total cost of Chancellor Rishi Sunak's interventions, including the furlough scheme, business loan guarantees and public service spending will amount to £123 billion in 2020-21.
By June, government borrowing is likely to be higher than any other year on record, the figures suggest. It comes a month after the OBR's "scenario" for the impact of the Covid-19 crisis predicted the economy could shrink by 35% in the second quarter of 2020.
In the scenario, experts at the independent group told the Government that unemployment would rise to 10% of the working population.
The OBR said: “The longer the period of economic disruption lasts, the more likely it is that the economy’s future potential output will be scarred.”
It said the furlough scheme cost estimates were updated from £49 billion to £63 billion this year on the assumption that businesses will pick up around half the £14 billion a month tab from August to October.
But it cautioned: "There is insufficient detail for us to reliably estimate the cost of the post-July period at this stage, though the Chancellor has said he expects the Treasury to continue paying 'the lion's share'."
Since launching the scheme, around 7.5 million jobs have been covered at a cost of £10.1 billion in the first 15 days.
The amounts being spent on public services were revised down slightly to £15 billion, taking into account costs from the previous financial year being removed but also including new Government spending pledges including £250 million of a £2 billion package for cycling and walkway funding, it added.
The independent group has based the grim outlook on a scenario where the lockdown lasts three months followed by a partial lifting for three months.
But the OBR has said in this case, there will be a sharp bounce back in the economy, with GDP likely to jump 25% in the third quarter and a further 20% in the final three months of 2020.
