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The coronavirus crisis could spark an economic nightmare that leaves 3.4 million people ­jobless, experts warned last night.

Government borrowing may also soar to its highest since the Second World War, with a £218billion leap.

Chancellor Rishi Sunak warned he “could not protect every business” and added: “These are tough times and there will be more to come.”

But he insisted there will be a quick “bounce back”. Covid-19 UK deaths rose by 778 yesterday to 12,107

Chancellor Rishi Sunak warned many businesses could collapse with Britain heading for a summer of economic ­misery.

The Office for Budget Responsibility said unemployment may hit 3.4 million – the highest since the dark days of Margaret Thatcher – and government borrowing faces a £218billion hike.

And with the UK’s Covid-19 death toll rising by 778 to 12,107, ministers are tomorrow expected to extend the lockdown by three weeks.

That will leave many struggling ­businesses fearing for their survival, with the economy possibly shrinking by a third. And only 2% of firms affected have accessed the government loans scheme.

(Image: 10 Downing Street/Getty)

But the OBR insisted there would be a “bounce-back” later in the year.

Mr Sunak admitted he was “deeply troubled” by the figures and said the coronavirus will have “serious ­implications” for the economy.

He added: “These are tough times and there will be more to come. We can’t protect every business or every household but we came into this crisis with a fundamentally sound economy powered by the hard work and ingenuity of the British people and British businesses.

“While those economic impacts are significant, the OBR also expects them to be temporary.”

The OBR said government borrowing, which stood at £1791.5billion last month could reach 14% of GDP.

It added: “That would be the largest single-year deficit since the Second World War.

The net effect of the coronavirus impact and the policy response is likely to be a sharp (but largely ­temporary) increase in ­government borrowing that will leave public sector net debt permanently higher as a share of GDP.”

The OBR feared national debt would surge beyond 100% of GDP, before ending the year at 95%. The most recent pre-pandemic prediction was 77%.

The Resolution Foundation think-tank warned the economy was heading for its biggest annual fall in GDP in 300 years – when the war of Spanish succession in 1706 and Western Europe’s great frost three years later hit hard.

Chief executive Torsten Bell said: “The UK is ­experiencing a deeper recession than we have seen for three centuries and is on course for the highest borrowing since the war.

"While driven by the ­Government’s twin decisions to close down large swathes of our economy and offer ­unprecedented support to firms and families, its actual cause is the coronavirus outbreak itself.

(Image: PA)

“This should caution against those arguing policymakers can avoid these costs by ending the lockdown.”

A British Chambers of Commerce survey found only 2% of businesses had successfully accessed the ­Coronavirus Business Interruption Loan Scheme. One in three have put between 75% and 100% of staff on furlough, the scheme which covers 80% of salaries up to £2,500 a month.

BCC director general Dr Adam Marshall said: “Businesses on the front line need cash to start flowing from support schemes, fast.

“With April’s payday coming up, we are approaching a crunch point, and both the furlough scheme and CBILS ­facilities need to be accelerated.

“Any delay could mean more ­livelihoods under threat, more ­business failures, and more hardship in our communities.” The BCC said cash flow also remains a concern, with more than half of firms reporting reserves of three months or less.

Shadow Chancellor Anneliese Dodds said: “It is absolutely critical the Government now does all it can to minimise the depth and length of the economic impact from necessary anti-coronavirus measures.”

(Image: PA)

The OBR warned 2.1 million people could end up jobless – adding to the 1.3 million already out of work. That will top the 3.1 million thrown on the scrapheap by Mrs Thatcher’s savage economic policies.

Despite the likely extension of the lockdown until at least May 7, debate rages over when schools could reopen.

Children are among the ­least affected by Covid-19, but it is unclear whether parents would be willing to risk sending their kids back.

And teaching unions insisted staff and pupil safety remained key before any return could be considered.

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Keir Starmer backed an extension to lockdown but called on Foreign Secretary Dominic Raab, standing in for the recovering Boris Johnson, to outline an exit plan.

The Labour leader said: “We agree the measures need to remain in place, but to ­maintain morale and hope, people need a sense of what comes next.

“The silent pressures on ­communities across the country cannot be underestimated.”

But a government source insisted: “Our strategy is focused on saving lives. All decisions will be guided by the scientific advice and data.

"Talk of an exit strategy before we have reached the peak risks confusing the critical message that people need to stay at home in order to protect our NHS and save lives.”

More than one in five deaths recorded in England and Wales are now linked to coronavirus, figures showed.

There were fears some fatalities were not being blamed on Covid-19.

There were 16,387 deaths in England and Wales in the week to April 3, a rise of 6,082 compared with the average in the last five years. Based on death certificates, coronavirus can only explain 57% of the difference.

Nick Stripe of the ONS said: “It could be the doctor certifying the death is not sure enough to the best of their knowledge that it was caused by Covid-19 and so isn’t comfortable putting it on the death certificate.”

Mr Johnson today continued his recovery from coronavirus at his country retreat, Chequers.

His spokesman confirmed the PM was not taking phone calls or reading government papers.

He added: “The priority is for him to rest.”