It comes after the UK GDP suffered its worst contraction since records began in 1997, with a loss of 5.8 percent.

Andrew Bailey has suggested that the Bank of England can help Britain cope with extra debt incurred through COVID-19 relief policies.

When asked by ITV if a return to austerity would be needed in the wake of the COVID-19 recession, he suggested that the UK has “choices.”

He said: “One of the reasons that the Bank of England [is] acquiring a much larger stock of Government debt than … would have been imagined [a decade ago], is that what we can do, providing the overall credibility of the framework remains in place – and independence is very important to that point – is that we can help to spread over time the cost of this thing to society and that to me is important.

“We have choices there and we need to exercise those choices.”

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The day before, the Telegraph revealed a document showing Chancellor Rishi Sunak has asked his top experts for a “medium term” analysis on how he might begin to even contemplate paying the huge bill.

The Treasury is in discussions over raising taxes on a much larger scale, where pensioners, workers and homeowners may all need to pay more to fund the growing cost of the virus crisis.

In the documents presented to the Chancellor, officials have set out options for how to fund the expected gaping hole created in the public finances.

Rises to income tax, VAT, national insurance and corporation tax are all under discussion.

Many economists are warning that tax increases and spending cuts could cut off any recovery.

Tej Parikh, chief economist at the ­Institute of Directors, said: “Hiking taxes could choke off our eventual ­recovery, particularly with many firms already trying to pay off loans.

“In many ways, the best way to ­address the public debt burden is actually by boosting growth and productivity.

“For now, the Treasury can tap low interest rates to help fund this.”

Peter Dixon, an economist at Commerzbank, also expects a recovery to push the deficit back down over time.

He said: “Short of whacking up income tax or national insurance contributions or, God forbid, VAT, it is difficult to get the kind of short-term bang for your buck that the Government will be hoping for, so it is going to be a long haul.

“We have to accept that when we get a major hit to the economy like this, you cannot just turn it around in a year or two.”

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The UK’s GDP is likely to fall even faster in the second quarter of the year.

This one monthly drop is almost as steep as the entire drop suffered in the 2008 financial crisis, when output fell 6 percent over a period of more than a year.

GDP tumbled by two percent in the first quarter of 2020 as a whole according to the Office for National Statistics, its worst performance since the end of 2008.

The Chancellor is weighing up calls to double a little-used monthly ­allowance to offset higher utility bills for people working from home as a ­result of the lockdown.

In other relief announced by the Chancellor, the furlough scheme has been extended to October at its original rate of 80 percent of workers wages.

But he has also said the government will ask companies to “start sharing” the cost of the scheme from August.

A quarter of the workforce, some 7.5 million people, are now covered by the scheme, which has cost £14 billion a month.

Mr Sunak told the Commons said: “I’m extending the scheme because I won’t give up on the people who rely on it.

“Our message today is simple: we stood behind Britain’s workers and businesses as we came into this crisis, and we will stand behind them as we come through the other side.”