‘We are not in control’: Alistair Darling warns coronavirus economic impact will be far worse than financial crash

'You can deal with a bank crash fairly quickly but this is taking a lot longer'

The UK economy will take longer to recover from the coronavirus outbreak than from the 2008 financial crisis, Alistair Darling has said.

In a stark warning, the former Labour chancellor said the economic hit from the global pandemic would be "much, much worse because we are not yet in control of events".

Lord Darling, who led the Treasury during the financial crash, said the UK's ability to recover depends on decisions the government takes in the next three to four weeks and called for a clear plan on how the lockdown will be lifted.

Boris Johnson is under pressure to reveal government plans to ease strict restrictions on daily life which have been in place since March, amid fears a sustained lockdown will devastate the economy.

Speaking at a briefing for the Tony Blair Institute for Global Change, Lord Darling said compared the coronavirus crisis to 2008, saying: "I’m afraid this is much, much worse because we’re not yet in control of events.

“You can deal with a bank crash fairly quickly but this is taking a lot longer."

He said the government has "no alternative" but to support the economy, adding: "When things collapse all about you, the government is the lender and insurer and sometimes the provider of last resort."

Ministers must not obsess about debt levels as the long-term impact of allowing unemployment levels to rise and businesses to collapse will be far worse, he said.

Lord Darling added: "If we let people go out of work, lose skills, if we let firms collapse on a dramatic scale, we will pay the cost of that for years to come."

He also urged the government to set out a plan for getting out of the lockdown.

The former chancellor said: "I'm not arguing that that can happen today or next week. We need for health reasons to do what we do at the moment, to a large extent remaining at hope.

"But the government now has to give the public confidence, and dare I say hope, in relation to how things will return to where people can get out and about and go to work."

Lord Darling, a vocal advocate of staying in the EU, called for an extension to the Brexit transition period while the outbreak continues as he said pressing ahead during the crisis was like "shooting yourself in both feet".

He added: "I don't think anyone would lose face if you put the thing off for 18 months or whatever."

Elsewhere, it emerged that business secretary Alok Sharma is working up plans to get businesses back up and running with a "workplace by workplace" approach.

A spokesman for the Department for Business, Energy and Industrial Strategy said: "The government has already set out five clear tests to consider before making any adjustment to its approach.

"It is only right the we work together with industry and unions to ensure workplaces are safe for both those in work now and for those going back to work as government measures develop."