The number of unemployed people in the UK is expected to surge to 2.6 million by mid-2021, Rishi Sunak has warned.

In his Spending Review, the chancellor said the UK’s “economic emergency” had “only just begun”.

The government expected to borrow £394bn this year – the “highest” level “in our peacetime history” – he added.

The latest figures show 1.62 million people are unemployed, a number which has risen by more than 300,000 since last year,

In the House of Commons, Mr Sunak said the government would spend £280bn this year “to get our country through coronavirus”.

He also announced that public sector pay would be frozen, except for the lowest paid, as well as nurses, doctors and other NHS staff who will get a salary rise.

And the chancellor said spending on overseas aid, as a proportion of national income, would be 0.5% in 2021-2 – down from the 0.7% currently set in law.