The UK will avoid a Brexit-induced recession at the turn of the year, according to a top think-tank.

The National Institute of Economic and Social Research (Niesr) expects the economy to contract by 0.2pc in the third quarter following the vote to leave the EU, but to grow by 0.1pc in the final three months of 2016.

This would see the UK avoid a technical recession - usually defined as two consecutive quarters of economic contraction.

The think-tank said swift action by policymakers could help to prevent a prolonged slowdown as it downgraded its UK growth forecast for 2016 to 1.7pc, from a projection of 2pc in May.

Economists said there was still an “evens” chance of recession over the next 18 months.

Simon Kirby, head of macroeconomic forecasting at Niesr, said the UK economy had expanded by less than 1pc in just nine years out of the past 50.

“Seven of those were outright contractions, so this is a notable slowdown in the economy,” he said.