Rishi Sunak said people should expect the economy to “get worse before it gets better”.
The Chancellor gave an economic update in the House of Commons, saying: “Despite the significant economic support we have given, over 800,000 people have lost their jobs since February.
“While the new national restrictions are needed to control the spread of the virus, they will have other significant economic implications.
“We should expect the economy to get worse before it gets better.”
The Chancellor added that the government had drawn up a “comprehensive economic plan”.
He told MPs: “We have provided over £ 280 billion in tax incentives to fund our plan for jobs, support public services like the NHS, and support millions of people and businesses.
“1.2 million employers have taken leave of almost 10 million employees. Almost three million people have benefited from our self-employment grants, increasing total self-employment assistance to nearly £ 20 billion.
“Over 1.4 million small and medium-sized businesses have received government-backed loans valued at over £ 68 billion.”
Rishi Sunak said the UK’s economic response to Covid-19 is making a difference.
He told Commons: “Unfortunately we cannot and will not save every job and every company.
“However, I am confident that our economic plan will support the finances of millions of people and companies.
“In almost all areas of economic policy, we offer support that is comparable to or greater than that of all of our international colleagues.
“And, as the Budgetary Responsibility Office, Bank of England and IMF have all recognized, our economic response makes a difference – it saves jobs, keeps businesses alive and supports people’s incomes.”
Rishi Sunak said that “the road ahead will be difficult” as the UK recovers from the pandemic.
He told MPs: “While the vaccine gives hope, the economy will deteriorate before it gets better.
“Lots of people are losing their jobs, companies are in trouble, our public finances have been badly damaged and need to be repaired.
“The way ahead will be difficult. Now is the time for a responsible management of our economy to make the difficult but right long-term decisions for our country.
“But I am confident that with this full government support and, above all, with the determination, entrepreneurship and resilience of the British people, we can do it.”