As many as 1.2 million workers could lose their jobs by Christmas, according to a think tank, taking the number of people in unemployment to three million.

The Centre for Economics and Business Research (CEBR) has increased its unemployment forecast, now estimating 1.25 million could be gone within the next two months.

It has calculated that 1.2 million furloughed workers could be laid off when the scheme stops at the end of October, with a further 300,000 likely to be made redundant.

The think tank warned: “The job market outlook is negative for the coming months. The coming winter looks set to be a tough one.”

If these figures are realised, it would push the total number of people out of work to three million and the unemployment rate above 8% for the first time since the financial crisis a decade ago.

The CEBR also raised doubts about the government’s announcement that staff at businesses forced to close in the worst affected areas will receive 67% of their pay. The think tank believes it will do little to avoid job losses, estimating it will save just 250,000.

At adds to the concerns of other business groups and the Labour Party that the scheme doesn’t take into account the ‘ripple effect’ for supply chains affected by the shutdown of the hospitality industry.

Another think tank, EY Item Club, said the economy had grown faster than expected in the third quarter but warned that growth will be sluggish in the final quarter, partly driven by job losses.