An escalation in the US-China trade war could have a more devastating impact on the global economy than the financial crisis a decade ago.

Figures from economists at the World Trade Organisation (WTO), which acts as an umpire in disputes over trade between nations, show a catastrophic trade war could trigger a 2pc fall in global GDP and push down international trade volumes by 17pc.

This would be more damaging than the 12pc fall in international trade seen during the crisis, and be at least as bad for global output as the 2pc slump in 2009.

Under this "worst case" scenario, the dispute would spill over to other nations, and lead to a complete breakdown in international tariff cooperation. All countries would instead set trade levies unilaterally.

The doomsday analysis comes as trade is already expected to slow sharply in the year ahead due to tensions between the world’s largest economies, the US and China, ramping up market volatility and dampening growth.

Trade volumes shrank in the final quarter of last year and the WTO has downgraded its economic forecasts in its annual report.