RISHI Sunak has warned that the UK economy will “get worse before it gets better” given the latest Covid-19 lockdown as he came under fire over post-Brexit trading rules which had brought the export of fish and seafood to a “grinding halt”.

In a Commons update on the economy, the Chancellor cautioned the “road ahead will be tough” for the UK in its recovery from the pandemic, telling Conservative colleagues he would “bear in mind” their calls to extend business rate relief and provide further support for the hospitality sector at the Budget in March.

The told MPs: “Even with the significant economic support we’ve provided, over 800,000 people have lost their job since February.

“And while the new national restrictions are necessary to control the spread of the virus, they will have a further significant economic impact. We should expect the economy to get worse before it gets better.”

Mr Sunak defended the Government’s “comprehensive economic plan”, noting the fiscal stimulus amounted to more than £280 billion.

Anneliese Dodds, his Labour Shadow, said the Chancellor “was nowhere to be seen” when Boris Johnson announced the latest lockdown and that in his economic update he appeared to be “out of ideas, urging us to look towards the sunny uplands but providing nothing new”.

Alison Thewliss for the SNP denounced the “shambolic” Conservative Government and upbraided Mr Sunak for not honouring the Treasury commitment to give the Scottish Government an extra £375 million as a Barnett consequential to last week’s multi-billion pound aid package for business across the UK.

The Glasgow MP asked why were “Scotland’s businesses not entitled to the many thousands of pounds English businesses will receive”.

But the Chancellor hit back, pointing out that the UK Government had “front-loaded” funding for Scotland at the request of Edinburgh in a so-called £8.6 billion Barnett Guarantee to help it plan its strategy to fight the coronavirus.

“The point about doing that is to provide upfront certainty but it is also right to keep a tally on the various announcements as they are made about the additional sums they do trigger for Barnett against that guarantee and over time that guarantee will be adjusted.”

Downing St has pointed out that on Christmas Eve the Treasury handed over £400m to the Scottish Government as more front-loaded funding.

Mr Sunak questioned whether or not Edinburgh was promising a similar grant of up to £9,000 for individual businesses. The Scottish Government was asked for a response on this point.

Meanwhile, Alistair Carmichael, the MP for Orkney and Shetland, took the Chancellor to task over his assertion that the UK-EU trade deal meant businesses could do things differently and better, saying they would have been “heard with total incredulity by anyone whose business involves the export of seafood”.

The Liberal Democrat MP denounced the new procedures for export as a “bureaucratic mess” that had brought export trade to a “grinding halt”.

The former Scottish Secretary explained: “One local fish trader told me this morning that a single consignment now has to go with no fewer than 17 different attachments and another told me on Friday that he had lost £50,000 on a single consignment that he had been unable to export.”

Mr Sunak responded by insisting the deal provided UK firms with tariff-free access to European markets and pointed out how “over time” the Government was looking to “streamline and improve all our processes,” having invested a huge amount of resource in IT systems and support for businesses which needed help filling out “various customs forms and meet[ing] new procedures”.