The OBR had suggested that GDP would drop by 35 per cent in the second quarter of this year

The Treasury’s internal assessment of the impact of coronavirus warns that it may have a permanent impact on the economy and that recovery could take years, The Times can disclose.

The assessment circulated among ministers last week is far more pessimistic than modelling by the Office for Budget Responsibility, the fiscal watchdog, published earlier in the week.

The OBR suggested that GDP would drop by 35 per cent in the second quarter of this year but would return to pre-outbreak levels next year. It suggested that the recovery would be a V-shape.

The Treasury’s analysis, however, is understood to warn that there will be permanent damage to the economy from the lockdown, which will worsen the longer it goes on.

Officials have examined a variety