Britain will suffer its deepest recession for 300 years if the coronavirus lockdown continues into the summer, according to the budget watchdog, as the Chancellor warned of “tough times” to come.

The Office for Budget Responsibility said the economy could shrink by 35 per cent this spring, with unemployment soaring by two million to its highest level since the nineties. It came as the International Monetary Fund said the global economy was heading for its biggest slump since the Great Depression of the thirties.

The OBR also said government borrowing could hit its highest level since the Second World War. Rishi Sunak stressed that the forecast – which assumes the lockdown continues for another two months – was “just one potential scenario”, but said it was “important that we’re honest” about the economic impact of the virus causing “hardship ahead”.

The grim forecast intensified the debate about when the lockdown should be eased.

Dominic Raab, the acting prime minister, is expected to announce on Thursday that it will carry on into next month, but many ministers are anxious to find ways of easing restrictions as soon as possible to ensure the long-term economic damage does not lead to more deaths than the virus itself.

The official UK death toll hit 12,107 on Tuesday as another 778 people died, with government sources stressing there could be no talk of an exit strategy “before we have reached the peak”.