COUNTY Durham could be forced to endure “prolonged unemployment”, service cuts and possibly even bankruptcy due to coronavirus.

The Covid-19 outbreak has blown a hole in the finances of English councils, many of which were already struggling with strained budgets.

And a new report has warned the country’s county councils such as Durham could be especially badly hit, facing the twin prospects of "unprecedented" increases to costs combined with a simultaneous drop in income.

Alan Napier, deputy leader of Durham County Council and cabinet member for finance, said:  “This report highlights the financial impact the coronavirus pandemic is having on local authorities across the country and the need for additional financial support from the Government.

“In County Durham, we currently estimate the financial impact of the coronavirus pandemic on the council will be £50 million up to March 2021.

“To date, we have received Government funding of £33 million, resulting in a £17 million shortfall. We are continuing to lobby strongly for additional funding for both 2020/21 and beyond.”

The report was prepared by Grant Thornton, a financial advisory firm, for the County Councils Network, whose 36 county local authority members cover more than 85 per cent of the country.

According to the findings, England’s county councils face a combined shortfall of up to £1.3 billion this year (2020/21) as a result of Covid-19.

And it warns a second spike in virus infections could inflate this figure to £1.9 billion. It adds this could see finance chiefs burn through savings, raising the prospect of "cuts to services to prevent insolvency".

Councillor Carl Les, finance spokesperson for the County Councils Network and leader of neighbouring North Yorkshire County Council, said: “This research shows the challenges facing county authorities and the severity of the potential impact on councils’ sustainability and provides important insights to inform government policy.

“Building on this evidence, we want to work with government to develop a comprehensive plan to support councils over the coming months and years. We know ministers are alive to the challenge and hope this report is a valuable contribution to informing future interventions to support all councils.”