Coronavirus is set to plunge the world into its biggest peacetime slump since the era of the Great Depression, according to alarming new forecasts.

The brutal recession triggered by the Covid-19 outbreak is likely to shrink the world economy by at least 4pc this year, the Centre for Economics and Business Research has warned.

Such a decline would represent some $3.6 trillion (£3trn) in lost output.

If the CEBR’s forecast is correct - and it cautions there is a “huge margin of error” - the fall would represent the worst year for global growth since 1931 outside of wartime according to the think-tank.

Doug McWilliams, chief executive of the body, warned that staving off a “1930s rout” was the chief priority for policymakers.

He said: “Even at the risk of huge rises in debt, the fiscal and monetary authorities need to cushion the blows of falling activity and in particular prevent them from generating a further round of contraction as this leads to falling incomes leading to falling spending.