The UK economy will shrink 11.3% this year according to official forecasts that lay bare the damage of Covid-19.

While the economy is expected to bounce back in 2021, it will not return to its pre-crisis size until the end of 2022.

The government will borrow £394bn this year to deal with the economic impact, the highest ever amount recorded in peacetime history.

Chancellor Rishi Sunak warned that the economic damage from the pandemic was "likely to be lasting".

UK government set to borrow £394bn this year, the highest amount ever in peacetime history, to help deal with coronavirus pandemichttps://t.co/uSZ6Z95yr2

— BBC Breaking News (@BBCBreaking) November 25, 2020

The economic decline in 2020 is expected to be the worst in 300 years.

The government's independent forecaster, the Office for Budget Responsibility (OBR) expects growth of 5.5% in 2021 and 6.6% the following year.

Mr Sunak said the government had already spent £280bn to help support the economy through the coronavirus and would spend a further £55bn next year as part of a package of measures to support the recovery. This includes billions of pounds to help people find jobs.

However, Mr Sunak said long-term scarring meant the economy would be 3% smaller in 2025 than expected in the March budget.

The OBR expects unemployment to peak at 2.6 million next year, although fewer jobs are expected to be lost than predicted this summer.

The government has extended its furlough scheme to support jobs and wages until next March.