OBR forecasts 'lasting' economic damage from Covid-19: Spending Review

Outlined in the government's Spending Review, Chancellor Rishi Sunak said the fall was the largest for more than 300 years.

The OBR predicts that the economy will recover by 5.5% in 2021, 6.6% in 2022, then 2.3%, 1.7% and 1.8% in the following years.

It says output won't return to pre-crisis levels until Q4 2022, describing the economic damage as "lasting", with "long-term scarring".

By 2025, the economy is predicted to remain 3% smaller than expected.

Sunak outlined a "significant but necessary increase in borrowing and debt", with the UK forecast to borrow a total of £394bn this year, equivalent to 19% of GDP - the largest in peacetime history.

Sunak said borrowing is expected to fall to £164bn next year but will remain at £100bn or more until the end of Parliament.

He added that underlying debt is forecast to rise in every year, rising from 91.9% of GDP this year, reaching 97.5% of GDP in 2025-26.

However, he stressed that the "cost of inaction would have been far higher”.