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Britain has been so hard hit by Brexit that there is a “significant risk” that it is already tipping into recession, leading economists warned today.

The National Institute of Economic and Social Research (NIESR) believes there is around a one-in-four chance that the economy will have shrunk from April to June and will also do so in the following three months.

It also puts the likelihood of a no-deal exit from the EU at some 40 per cent.

Even if such a no-deal departure could be done in an “orderly” way, it would still snuff out any economic growth in 2020 and send inflation to over four per cent, denting living standards for millions of families.

The UK is heading towards quitting the EU with the economy appearing to have lost any “significant momentum” given the “chronic” uncertainty facing businesses due to Brexit and slowing global growth, according to the NIESR.

“There is a significant risk that the economy is already in a technical recession,” it added.

The respected economists predicted that GDP contracted by 0.1 per cent in the three months to June.

They do expect the country to “narrowly” avoid recession, defined as two consecutive quarters of negative growth, with the economy forecast to post growth of 0.2 per cent in the three months to September.

“Nevertheless, with little positive momentum in the economy, output may contract again in the third quarter, and there is around a one-in-four chance of two consecutive quarters of negative growth,” it warned.

The outlook beyond October 31, when the UK is due to have left the EU, is “very murky” with the possibility of a “severe downturn” if there is a disorderly no-deal exit, with the Pound crashing to be worth around $1.10

The NIESR believes an orderly No Deal is more likely than a disorderly one, and that there is still around a 60 per cent chance of an agreement similar to Theresa May’s, another delay to Brexit beyond October or some form of “standstill arrangements” – which would mean the trading relationship with the EU is broadly unchanged.

If a No Deal is avoided, the economy is predicted to grow in both 2019 and 2020 by one per cent.

But if there is a crash-out from the EU, GDP growth is forecast to be zero next year, with interest rates rising from 0.75 per cent to 1.75 per cent.

Given all the possible scenarios, the economists judge that there is around a 30 per cent chance of a fall in output growth in 2020.

A rise in public spending also seems “inevitable,” with public borrowing also expected to go up.

Just days ago, the independent Office for Budget Responsibility warned that hurtling out of the EU with No Deal risked plunging the country into recession and blowing a £30 billion hole in the public finances.

Firms and households, though, may have become “complacent” about preparing for No Deal given that two Brexit deadlines have already come and gone, warned the NIESR.

It also stressed that warehouse space already limits further stock-building and will do so in particular in the run-up to Black Friday and the Christmas sales.