Mr Sunak today announced a string of new measures as he revealed Britain’s economy was forecast to shrink by 11 per cent and would not get back to where it was before the pandemic until the end of 2022.
He responded by announcing a series of pay freezes, a cut to the foreign aid budget, and a shared prosperity fund vowing to "at least match EU receipts".
The Chancellor claimed the crisis had sparked unprecedented amounts of spending, with the UK on track to spend £280 billion this year alone, with another £18bn set aside for 2021.
This will also see the nation's debt rising every year, reaching 97.5 per cent of GDP by 2026.
As a result, Mr Sunak revealed the Government was unable to provide an across-the-board pay increase for all public sector workers.
Instead, he announced a pay rise to more than a million nurses, doctors and others working in the NHS.
He also promised a pay rise of at least £250 for the 2.1 million public sector workers who earn below the median wage of £24,000.
There was also a hike to the National Living Wage, rising to £8.91 an hour for two million people.
The Chancellor also unveiled a three-year programme called the Restart Scheme, aimed at helping more than a million long-term unemployed.
With day-to-day-departmental budgets increasing by £14.8bn, Scotland was also handed a financial boost.
Mr Sunak also unveiled ‘City and Growth Deals’ in Scotland, aimed at helping Tay Cities, Borderlands, Moray and the Scottish islands to create jobs.
SNP shadow chancellor Alison Thewliss claimed the package showed the Government was “failing Scotland”.
She said: "The Tory government is threatening Scotland's recovery by slashing pay for millions of workers, and falling a long way short of the £98bn package of support for the economy and public services needed to secure a fair and full recovery from the pandemic.
“This failure will make the growing Tory unemployment crisis even worse, squeeze living standards even further, and risk a protracted downturn by starving the economy of funds.
“It shows, yet again, that Westminster cannot be trusted to act in Scotland's interests.
"By blocking the devolution of financial powers and withholding investment, the Tories are hindering Scotland's ability to respond to this crisis.
"The fact that the Tories are wasting millions on a Brexit festival while slashing public sector pay, and cutting support for the world's poorest, tells you everything you need to know about this government's twisted priorities.”
Scottish Conservative leader Douglas Ross claimed the investment meant Mr Sunak had “gone further than any government in peacetime history to protect jobs and support public services”.
He said: “These unparalleled spending promises show that the deep pockets of the UK Government are best placed to support Scottish jobs, schools and hospitals.
“The Scottish Conservatives argued for accelerated City and Growth deals to invest more quickly in Scottish communities, and we’re delighted to see that has been delivered alongside a bumper £2.4bn boost in Barnett Consequentials.
“There’s huge positives for rural communities across Scotland with a substantial investment to improve broadband, and welcome news that Scottish farmers and fisheries will benefit from even more financial backing.
"As the Fraser of Allander Institute made clear yesterday, the SNP’s Barnett Consequential funding disputes have no substance. They’re just another nationalist grievance.”
Scotland’s Finance Secretary Kate Forbes accused Mr Sunak of cutting the Scottish Government's capital budget.
She said: “Behind the Chancellor’s headline 27 per increase in UK capital expenditure, Treasury docs show a cut to the Scot Government’s capital budget by 5 per cent in cash terms.”
In a sombre address in the House of Commons, Mr Sunak claimed unemployment could hit 2.6 million people next year.
He said: “Our health emergency is not yet over. And our economic emergency has only just begun.
“So our immediate priority is to protect people’s lives and livelihoods.
“Even with growth returning, our economic output is not expected to return to pre-crisis levels until the fourth quarter of 2022.
“And the economic damage is likely to be lasting.
“Long-term scarring means, in 2025, the economy will be around 3 per cent smaller than expected in the March Budget.”
The Chancellor had also announced a cut in the foreign aid budget, slashing it from 0.7 per cent to 0.5 per cent.
Keeping it at 0.7 per cent was in the Tory manifesto, the Prime Minister’s leadership pitch and is also enshrined in law.
Mr Sunak explained: “This country has always and will always be open and outward-looking, leading in solving the world’s toughest problems.
"But during a domestic fiscal emergency, when we need to prioritise our limited resources on jobs and public services, sticking rigidly to spending 0.7 per cent of our national income on overseas aid is difficult to justify to the British people.”
The move sparked a furious response, including on the Conservative benches.
Minister for Sustainable Development Baroness Sugg resigned, labelling the decision "fundamentally wrong", while Tory MP Andrew Mitchell claimed it would lead to "a hundred thousand" preventable deaths, mainly of children.
Liberal Democrats leader Ed Davey claimed the Chancellor had failed to ensure “no-one is left behind”.
He said: “The Chancellor has also made some unforgivable political choices today.
“He has chosen to continue to ignore people excluded from support and chosen to reject calls to properly extend furlough, leaving too many people facing unemployment. People deserve better.”