In the April-June period alone, economic output could plunge by 35%, with the unemployment rate more than doubling to 10%, the Office for Budget Responsibility said on Tuesday. A bounce-back may come later in the year if restrictions on public life to slow the spread of the coronavirus are lifted.

The OBR stressed it was not making an official projection, given the lack of clarity about the duration of the government-imposed shutdown which it assumed would last for three months, followed by a partial lifting over a further three-month period.

Separately, the International Monetary Fund said it expected Britain's economy to shrink by 6.5% in 2020, similar to contractions in other economies, before growing by 4.0% in 2021. But the outlook for Britain's public finances is stark.

The OBR said the hit to tax revenues and the government's huge spending plans meant the budget deficit could hit 273 billion pounds in the 2020/21 tax year — five times its previous estimate.

That would be equivalent to 14% of gross domestic product, higher than the 10% level hit after the global financial crisis that began in 2007. The country had gradually lowered the deficit to about 2%, mainly through a decade of spending cuts for many public services.

The Resolution Foundation, a think-tank, said it was plausible the economy could suffer a more sustained hit than outlined by the OBR.

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Full article: UK economy could shrink by 13%