Video report by ITV News Political Correspondent Libby Wiener
The UK has officially entered into recession after the coronavirus crisis caused the economy to contract by a record 20.4% between April and June.
It is the "largest recession on record", the Office for National Statistics (ONS) said, and the first time a recession has been declared in the UK since the financial crash of 2008.
Chancellor Rishi Sunak admitted "hard times are now here" as the record-breaking contraction in the second quarter (April, May and June) follows a 2.2% fall in the previous three months.
A recession is defined as two successive quarters of decline in gross domestic product (GDP) - the amount of goods and services a country produces.
But monthly figures showed the economy bounced back by 8.7% in June, following upwardly revised growth of 2.4% in May, as lockdown restrictions eased.
The ONS said the economy is still a long way off from recovering the record falls seen in March and April after tumbling into the biggest recession on record.
Despite some positive news and the easing of lockdown, many businesses are still struggling.
Rumit Shah, the director at Cards Galore, warned a drop in tourists and commuters will further impact his industry.
He told ITV News: "The business rates have been postponed until March, which is a good sign.
"They have given business grants and obviously they are limited to certain sizes of companies and certain rateable values."
But he added: "There's a whole industry which is based on office workers and commuters and tourists and students and that's what supports city centres and if those people are not there then it doesn't help... businesses like ours."
When asked if fewer people going back to the office is a major problem for the economy, Mr Sunak said he hoped to see more people returning to the workplace in the coming weeks.
The chancellor also highlighted the importance for graduates to begin jobs in an office environment in particular, rather than working from home.
"It's not great for people starting in their careers to be sat at home doing everything on Zoom," he said.
"I think you need to be in an office environment with your colleagues, your peers learning, interacting, adjusting to the culture.
"That's what makes organisations strong and fulfilling places to work over time."
He said "it's not good for the economy" and having people "coming back and forth to work has a knock-on effect", especially in cities.
Despite the grim figures, Mr Sunak promised "hope" in these "hard times" for everyone.
He said: "When we were talking about this a few months ago, I said hard times are coming.
"Today's figures show that hard times are here, hundreds of thousands of people have already lost their job and sadly many more will.
"But I will say to people although tough decisions lie ahead for all of us no one will be left without hope or opportunity."
With the furlough scheme set to finish at the end of October, the chancellor said it is not "sustainable indefinitely" but that "it's not that there's no support".
He pointed to the £1,000 bonus for businesses that retain furloughed employees, which he described as a "significant incentive".
ONS figures on Tuesday showed the number of people in employment fell by the largest amount in more than a decade between April and June.
Mr Sunak said there is a need to provide people with "fresh opportunity" as he admitted not everyone will be able to return to the job they had prior to the pandemic.
'We shouldn't pretend that it will always be possible for people to go back to the job they had'
However, Labour leader Sir Keir Starmer said "serious questions" needed to be asked of the government's strategy.
He said: "We've got one of the worst death rates across Europe and now we're going to have one of the worst recessions so serious questions have to be asked about the strategy the government is adopting here.
"The United Kingdom should not be in this position."
Shadow minister Kate Green described a "very, very worrying trend" and said she feared the impact of the end of the furlough scheme.
"I don’t think it is really satisfactory to say that nobody should be worried about being left behind," she said.
"When already people are very frightened, are in a very difficult position, and can’t access the support that they continue to need."
Jonathan Athow, deputy national statistician at the ONS, said: “The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record.
“The economy began to bounce back in June, with shops reopening, factories beginning to ramp up production and house-building continuing to recover.
“Despite this, GDP in June still remains a sixth below its level in February, before the virus struck.
Suren Thiru, head of economics at the British Chambers of Commerce (BCC), said the second quarter is likely to prove to be "the low point" for the UK economy as restrictions continue to ease.
But he warned against hopes of a "swift V-shaped recovery" as the economic damage caused by the pandemic "increasingly weighs on activity". “Against this backdrop, bold action is needed to immediately inject confidence back into the UK economy," he said. “This should include supporting businesses to retain staff through a cut in employer national insurance contributions and targeted support to help businesses placed under local lockdowns.”
In response to the recession, shadow chancellor Anneliese Dodds tweeted: “We’ve already got the worst excess death rate in Europe – now we’re on course for the worst recession too.
“That’s a tragedy for our country and it’s happening on the PM’s watch. A downturn was inevitable after lockdown – Johnson’s jobs crisis wasn’t.”