The chancellor has admitted he is “deeply troubled” by warnings that the UK economy could shrink by 35% in the coming months as the economic costs from the coronavirus crisis mount.

Speaking after the government’s independent economics watchdog warned that gross domestic product (GDP) could collapse by more than a third in the second quarter, with unemployment rising by more than 2 million, Rishi Sunak said it was still vital to maintain the government’s lockdown measures.

“It’s not a case of choosing between the economy and public health. Common sense tells us that doing so would be self-defeating,” he said.

Although saying that the analysis from the Office for Budget Responsibility was a scenario and not a forecast, he added: “I also, when I see these numbers, am deeply troubled.”

He added: “This is going to be hard. Our economy is going to take a significant hit and as I’ve said before that’s not an abstract thing. People are going to feel that in their jobs and in their household incomes.”

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Amid rising pressure on the government to outline an exit strategy from lockdown after three weeks of tough controls on social and economic activity, Sunak said the priority now was to mitigate the impact from Covid-19, and that the country could bounce back quickly thanks to the government’s emergency interventions.

Taking questions at Downing Street’s daily coronavirus press conference, he said the best way out of the economic slump in future would be to reboot growth and spread prosperity throughout different regions of Britain. Asked whether austerity might be required to control a spiralling budget deficit, he said the government was still committed to its “levelling-up” agenda.

“When we come out of this in terms of righting the ship, we’ll have to look at it then. Obviously this has cost a lot. But as I’ve said before, the best way out of this for all of us is to just grow the economy, which is why trying to keep as much of it as intact as possible at this moment allows that bounce-back when we come out of it and allows us to hopefully snap back to normal as quickly as possible.”