THE UK economy will fall off a cliff edge, plunging 35 per cent between April and July but should recover by the end of the year, according to the Office for Budget Responsibility.
Experts at the independent group added that unemployment is expected to hit 3.4 million, around one in 10 of the working population without a job, if the lockdown lasts three months followed by a partial lifting for three months.
The OBR added that, on its new prediction, GDP will then jump 25 per cent in the third quarter and a further 20 per cent in the final three months of 2020.
Public sector net borrowing is also expected to increase by £218 billion this year, compared with March forecasts, hitting £273 billion, or 14 per cent of GDP.
The OBR added: "That would be the largest single-year deficit since the Second World War.
"The sharp rise in borrowing this year largely reflects the impact of economic disruption on receipts (with smaller effects from policy measures like the business rates holidays) and policy measures that add to public spending (with smaller effects from higher unemployment)."
Public sector net debt also rises sharply, surpassing 100 per cent of GDP during the year, but ends it at 95 per cent compared with previous estimates of 77 per cent.
Forecasters at the OBR were keen to stress this is a single scenario where "for now, we have not assumed the shock has lasting economic consequences" and should not be taken as a sign of what Government policy is likely to be.
Businesses are desperate for access to cash to stay afloat, with only a small fraction of the money promised making it into the bank accounts of struggling companies.
Meanwhile former chancellor Alistair Darling has said "we have to do whatever it takes to keep the economy going".
The Labour peer warned the government had "no alternative but to see this out" both in economic and health terms "because the cost of not doing so would be absolutely horrific".
Lord Darling, who spearheaded Labour's response to the 2008 financial crisis alongside then prime minister Gordon Brown, said the Government needed to "share some of its thinking" on the proposed exit strategy.
Asked how long the economy could survive the lockdown, he said: "Well there's a limit, but actually nobody knows what it is because we've not been here before...
"The problem we've got today is that we're not yet on top of this epidemic, we don't know how long it is going to last and the very fact that we don't know whether we're going to have a lockdown continuing for three weeks or maybe beyond that, at least to some extent demonstrates the scale of the problem that we've got.
"The gvernment has no alternative but to see this out, both in financial terms, economic terms as well as in health terms, because the cost of not doing so would be absolutely horrific."
All governments across the globe, he said "were slow off the mark in realising the scale of this".
