Chancellor Rishi Sunak has reportedly told ministers to expect GDP to fall by as much as 30 per cent between April and June.
The government’s draconian social distancing measures will be reviewed next week, with an extension considered a formality.
The coronavirus lockdown has already begun to bite the UK economy, with activity in the manufacturing sector hit with its largely monthly decline in March for almost a decade.
Claims for Universal Credit also increased fivefold last month, according to the Department for Work and Pensions.
The Times reports today that the chancellor has told ministers that GDP could fall by “25 per cent to 30 per cent” in the second quarter.
Sunak has yet to give a public estimate of how much Treasury is expecting GDP to fall due to the Covid-19 outbreak, however some banks are predicting up to 25 per cent.
When asked about the predicted drop in GDP today, the Prime Minister’s official spokesman declined to comment.
Some members of cabinet are reportedly urging for the lockdown to be eased next month among fears of long-lasting damage to the economy.
One minister told The Times: “It’s important that we don’t end up doing more damage with the lockdown.
“We’re looking at another three weeks of lockdown and then we can start to ease it.”
The UK has recorded the fourth most coronavirus deaths in the world, after Italy, Spain and France.
Italian Prime Minister Giuseppe Conte announced last week that the country would stay in complete lockdown until May 3, meaning the measures will be in place for at least two months.
Spain has moved to ease some of its tougher restrictions, such as closing down construction sites, but remains in a lockdown similar to the UK.
By Stefan Boscia
Source: City AM