Chancellor Rishi Sunak has said the UK faces an “economic emergency” as he warned the coronavirus crisis will leave more than 2.5 million people in the UK unemployed by the middle of next year.
Unemployment is predicted to peak in the second quarter of 2021, at 7.5 per cent.
In total, that would mean 2.6m people out of work.
Although unemployment is predicted to fall every year after that, it is still due to stand at 4.4 per cent by the end of 2024.
Mr Sunak announced the bleak predictions in his spending review, as he warned the UK was facing an “economic emergency” in the wake of the pandemic.
Official forecasts show the UK economy is expected to shrink by 11.3 per cent this year, the worst recession for more than 300 years.
The economy is not predicted to return to pre-crisis levels for another two years.
But the crisis will leave “long-term scarring” that means that by 2025 the economy will be around 3 per cent smaller than expected in Mr Sunak’s budget in March.
And the UK’s underlying debt will continue to rise every year, reaching 97.5 per cent of GDP in 2025-26, Mr Sunak told MPs.
But he added: “High as these costs are, the costs of inaction would have been far higher.”
As expected, Mr Sunak announced that nearly £3 billion would be provided for a new three-year “restart programme” to help those out of work for more than a year find a job.
