Britain will fall into recession next year and the economy will shrink if there is a no-deal Brexit, according to reports.
The UK’s official economic forecaster is expected to say today that the economy will be three per cent smaller if country crashes out of the EU with no deal.
The Office for Budget Responsibility will give its first assessment of the economic impact of a no-deal Brexit, including how it could impact household incomes, wages, employment and house prices.
The five-year forecast predicts that the economy will contract in 2020 as Britain official enters into a recession, The Times reports.
It is expected that the economy will recover the following year, however GDP is still likely to be at least 3 per cent lower under a no-deal than if the UK leaves the EU with a deal.
It comes amid heightened tensions over no-deal with MPs set for a Commons showdown on Thursday over moves to prevent EU withdrawal without an agreement.
MPs will have the chance to vote on legislation that could potentially thwart efforts by the next prime minister to try to suspend Parliament to force no deal on October 31.
The clash is looming because the Lords strongly backed a bid to block Parliament being suspended in order to facilitate a no-deal exit by a margin of 103 votes on Wednesday.
Labour joined Liberal Democrats and leading independent crossbenchers in the upper house to try to scupper what opposition peers branded a “constitutional outrage” by amending Northern Ireland legislation.
Front runner for the Tory leadership Boris Johnson again refused at the final campaign hustings on Wednesday to rule out proroguing – suspending – Parliament in order to meet his red line of getting the UK out of the EU by October 31.
Rival for Number 10 Jeremy Hunt has insisted he would not use such a constitutional manoeuvre to force EU withdrawal.
Mr Johnson is expected to immediately launch a major drive to prepare the country for a no-deal Brexit if he becomes prime minister.
The front-runner for the Tory leadership has insisted that if he becomes PM next week he would ensure the country was ready for the impact of no-deal.
He told ITV’s Peston: “From the get go we start saying, look, what do you need, what help do you need, what reassurances do you need?
“Here is what the Government has for you. Are you ready?
“And, we make sure everybody understands all the possible risks and eventualities.
“And, it’s by doing that… in a really wholehearted and systematic and confident way that you, of course, minimise any disruption that might take place in the unlikely eventuality of you, actually, having to come out on WTO terms.”