UK cabinet ministers expect the number of unemployed people to rise to 4.5 million over the next year, the highest number since records were started, Sunday Times reported.
The ministers will present their projections to Prime Minister Boris Johnson, the newspaper said.
One in three companies is expected to lay off staff because of the coronavirus pandemic, the newspaper cited a Chartered Management Institute survey as showing.
About 34% of managers plan to dismiss employees, while 26% expect they will have to cut people this year, according to the survey.
Britain's economy shrank by a quarter over March and April as entire sectors were shuttered by the coronavirus lockdown in what looks likely to be the bottom of a "catastrophic" crash before a long and slow recovery.
Dwarfing previous downturns, the economy contracted by 20.4% in April from March, when it shrank by nearly 6%. It was 24.5% smaller than in April 2019.
Both of April's readings represented bigger falls than the dire forecasts in a Reuters poll of economists.
The Office for National Statistics said the economy had shrunk back to its size in 2002.
"This is catastrophic, literally on a scale never seen before in history," Paul Johnson, director of the Institute for Fiscal Studies think tank, said. "The real issue is what happens next."
Prime Minister Boris Johnson said the figures were no surprise as Britain's huge services sector was being hit particularly hard by social distancing measures, but he said a recovery would follow.
"Coronavirus is likely to hit a country like the UK economically very hard. We depend on services, on human contact," he said. "But we're also a very resilient and a dynamic economy and we will bounce back."