Two million could lose jobs amid Covid-19 crisis, watchdog warns

More than two million people could lose their jobs and the economy may fall off a cliff edge because of the coronavirus lockdown, the UK's fiscal watchdog has said – as the Chancellor warned of "tough times" to come.

The Office for Budget Responsibility (OBR) said unemployment could hit 3.4 million – up from 1.3 million – leaving around one in 10 of the working population without a job, while the economy may shrink by 35% between April and June.

Rishi Sunak said not every business or household could be protected, but that a "bounceback in growth" was expected when the crisis eases.

It came as the death toll for patients in hospital who tested positive for coronavirus rose above 12,000, while ministers faced pressure from Labour to publish their lockdown exit strategy this week. In other developments:

– A survey by the British Chambers of Commerce suggested around one in three British businesses has furloughed between 75% and 100% of its workforce due to the coronavirus crisis.

– The International Monetary Fund projected that the global economy would suffer its worst year since the Great Depression in the 1930s, shrinking by an estimated 3%.

– Sir Simon Stevens, chief executive of NHS England, is reported to be the latest senior figure leading the UK's response to the crisis to have suffered from coronavirus. The BBC said he had self-isolated for just over a week.

In its first estimate of the economic toll taken by the crisis, the OBR said public sector net borrowing is expected to increase by £218 billion this year, compared with March forecasts, hitting £273 billion, or 14% of GDP.

"That would be the largest single-year deficit since the Second World War," the independent forecaster said.

"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)."

It based the outlook on a scenario where the lockdown lasts three months followed by a partial lifting for three months, but said, in this case, that there would be a sharp bounceback in the economy, with gross domestic product likely to jump 25% in the third quarter and a further 20% in the final three months of 2020.

Mr Sunak told the daily Downing Street press conference: "These are tough times and there will be more to come. As I have said before, we cannot protect every business and every household.

"But we came into this crisis with a fundamentally sound economy, powered by the hard work and ingenuity of the British people and British businesses.

"So while those economic impacts are significant, the OBR also expects them to be temporary, with a bounceback in growth."

It came as Labour leader Sir Keir Starmer added his voice to calls for the Government to publish its exit strategy from the lockdown this week.

In a letter to Dominic Raab, who is deputising for Boris Johnson, Sir Keir said Labour would support the Government if, as is expected, it keeps the current measures in place.

But he said: "The question for Thursday therefore is no longer about whether the lockdown should be extended, but about what the Government's position is on how and when it can be eased in due course and on what criteria that decision will be taken."

A Government source said talk of an exit strategy before the UK has reached the peak "risks confusing the critical message that people need to stay at home in order to protect our NHS and save lives".

Elsewhere, Health Secretary Matt Hancock said all care home residents and social care staff with coronavirus symptoms will be tested as capacity increases.

He also vowed to provide tests for all potential care home residents before they are discharged from hospital.

It follows intense criticism of the Government's treatment of the sector, with claims it has been forgotten as the disease spread.

On Tuesday, figures released by the Office for National Statistics showed that 16,387 people died in England and Wales in the week to April 3 – an increase of 5,246 deaths compared with the previous week and 6,082 more than the five-year average.

Covid-19 was mentioned on 3,475 death certificates in the same week, including hospital, care home and community deaths.

But care home providers have warned they are seeing a higher number of cases and deaths than are officially reported, in part due to a time lag with the ONS figures.

The Department of Health and Social Care told the PA news agency on Tuesday lunchtime that there had been coronavirus outbreaks at 2,162 care homes in England.