A no-deal Brexit will send Britain into a recession and leave a £30billion hole in the public finances, the UK's budget watchdog warned today.

In its first assessment of the economic impact of crashing out without a deal this Autumn, the Office for Budget Responsibility said the Pound would nosedive by 10 per cent and the stock market by 5 per cent, pushing up inflation.

It said trade barriers and 'declining confidence' would make the economy shrink 2 per cent by the end of 2020, with the slump lasting a year.

However, Chancellor Philip Hammond warned that even the OBR's grim assessment underplayed the real risk - saying vision of No Deal being pushed by Boris Johnson would mean the country is 'hit much harder'.

Boris Johnson (pictured at last night's Tory hustings event) has said he will leave the EU without a deal in October if an agreement cannot be reached

Chancellor Philip Hammond (in Paris for a meeting of G7 ministers) warned that even that grim OBR assessment underplayed the real risk - and the vision of No Deal being pushed by Boris Johnson would mean the country is 'hit much harder'

The OBR estimated that under a 'benign' No Deal scenario real GDP will fall by 2.1 per cent by the fourth quarter of 2019, around the same as in the early-1990s recession

In the executive summary of its latest forecast, the OBR said of a No Deal scenario: 'Heightened uncertainty and declining confidence deter investment, while higher trade barriers with the EU weigh on exports.

'Together, these push the economy into recession, with asset prices and the pound falling sharply.

Remainers launch fresh Commons bid to stop No Deal Brexit Remainers are today launching a fresh bid to prevent No Deal - with ministers threatening to quit to joint the mutiny. MPs are set to vote on legislation that could thwart any effort by Boris Johnson to suspend Parliament to ensure Brexit happens on October 31. Mr Johnson, the overwhelming favourite to succeed Theresa May next week, has repeatedly refused to rule out using the constitutionally explosive tactic - although he has made clear it would not be his first choice. An eminent former judge warned today that efforts by ex-PM Sir John Major and others to bring a judicial review of such a move would be likely to fail. Justice Secretary David Gauke, who has already said he will not serve under Mr Johnson, this morning refused to rule out resigning to join the revolt. Chancellor Philip Hammond was also thought to be considering his position - but aides insisted that he has no plans to quit. Dozens more Tories on the Remainer wing could abstain to help avert the measure go through. Advertisement

'Real GDP falls by 2 per cent by the end of 2020 and is 4 per cent below our March forecast by that point.

'Higher trade barriers also slow growth in potential productivity, while lower net inward migration reduces labour force growth, so potential output is lower than the baseline throughout the scenario (and beyond).

'The imposition of tariffs and the sterling depreciation raise inflation and squeeze real household incomes, but the Monetary Policy Committee is able to cut Bank Rate to support demand, helping to bring output back towards potential and inflation back towards target.'

The OBR said the housing market would drop by 10 per cent if the aftermath of a No Deal.

The watchdog also said its scenario was 'relatively benign' and did not consider the prospect of France deliberately hampering trade across borders.

'This scenario is not necessarily the most likely outcome and it is relatively benign compared to some (for example, assuming limited short-term border disruptions),' the report said.

'But it still adds around £30billion a year to borrowing from 2020-21 onwards and around 12 per cent of GDP to net debt by 2023-24, compared with our March forecast baseline.'

Last November, the Bank of England warned the economy could shrink by eight per cent by 2035 and that interest rates would have to rise by 5.5 per cent to offset the impact.

The OBR report suggested public sector net borrowing (PSNB) will rise if there is no deal (left)- adding to the public debt mountain (right)

Responding to the report, Mr Hammond said it showed there would be a 'very significant hit' even in the 'most benign version' of No Deal.

In a swipe at Mr Johnson, he said: 'But that most benign version is not the version that is being talked about by prominent Brexiteers.

'They are talking about a much harder version, which would cause much more disruption to our economy, and the OBR is clear that in that less benign version of no-deal the hit would be much greater, the impact would be much harder, the recession would be bigger.

'So, I greatly fear the impact on our economy and our public finances of the kind of no-deal Brexit that is realistically being discussed now.'

It comes as MPs passed legislation that could potentially thwart efforts by the next prime minister to try to suspend Parliament to force through EU withdrawal without an agreement on October 31.

Theresa May slaps down Michel Barnier's claim she 'never told him no deal was a Brexit option' Downing Street angrily denied claims from a top Brussels bureaucrat today that Theresa May 'never' suggested Britain might opt for a No Deal Brexit during three years of negotiations with Brussels. The Prime Minister 'was clear both in public and in private that the UK was prepared to leave without a deal' her spokesman said this morning after claims made by Michel Barnier in a BBC documentary. Number 10 also attacked the BBC's decision to promote tonight's Panorama by interviewing Mr Barnier on its flagship Today programme this morning. The Prime Minister's spokesman said: 'How nice it was to hear from Michel Barnier again this morning. 'How generous it was of the BBC to give him a platform to share his views with us all. 'The Prime Minister had a series of conversations with EU leaders throughout the course of the negotiations and she was clear both in public and in private that the UK may leave without a deal.' Advertisement

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 yesterday.

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.

The change to the Northern Ireland (Executive Formation) Bill requires progress reports on restoring devolved government in Northern Ireland to be debated regularly in Parliament, effectively preventing it being prorogued.

In a clear statement of intent to Boris Johnson, the Commons dramatically passed an amendment today designed to thwart any effort to suspend Parliament to ensure Brexit happens on October 31.

The government was trounced by 315 votes to 274 despite imposing a three-line whip - meaning that Tories who failed to oppose the measure should have faced punishment.

Some 17 of the party's MPs joined Labour, the Lib Dems and SNP in backing the amendment, with culture minister Margot James quitting to take their side.

But humiliatingly Downing Street admitted that a swathe of more senior Conservatives who were among 30 abstainers will not face any punishment. They included Cabinet big beasts Philip Hammond, David Gauke, Greg Clark and Rory Stewart.

A spokesman for Theresa May said: 'The Prime Minister is obviously disappointed that a number of ministers failed to vote in this afternoon's division.

'No doubt her successor will take this into account when forming their government.'

Sources in the whips' office told MailOnline ministers should fall on their swords if they fail to vote with the government.

'Abstainers should walk too, but that won't happen,' they jibed.

Mr Johnson, the overwhelming favourite to succeed Mrs May next week, has repeatedly refused to rule out using the constitutionally explosive tactic of proroguing Parliament - although he has made clear it would not be his first choice.

Tory Phillip Lee, who supports the People's Vote campaign for a second referendum, was jubilant after the result.

'More and more Conservatives who care deeply about the national interest are now standing up for our democracy and our country,' he said.

'The sight of ministers resigning on this point of principle and others abstaining should give heart to all of us who believe we can avert catastrophe. 'Conservatives should not be trying to force a destructive Brexit on Britain when it is clear this was not what people voted for.

'Conservatives should not be inflicting a no deal on Britain when this was barely even mentioned in 2016. Conservatives should not even be thinking about bypassing either Parliament or the people on a crisis as momentous as Brexit.

'But, within days, more ministers will be sent to the backbenches and will be free to rebel against a disastrous no-deal.

'Parliament is in gridlock and there is no prospect of this changing any time soon. That is why there is a growing number of Conservatives who are turning to a pragmatic, democratic and patriotic solution of putting the decision back to the people in a final say referendum.

'When every other option has been ruled out, a People's Vote must and will emerge as the only viable and democratic solution to this crisis.'

However, Conservative Brexiteer Anne-Marie Trevelyan said: 'I can't understand why my colleagues are voting with Jeremy Corbyn on this.

'Do they want a hard left government to take control of their country? If they hated the prospect of delivering the referendum result, why did they vote for Article 50 in the first place?

'Their disruptive amendments are cynical and corrosive, but they don't change the underlying legal realities one jot: we are leaving on October 31 with or without a deal.

'When will my colleagues tell us what they really think and start calling for Article 50 to be reversed?'

The Boris effect? Tories have clawed back support from The Brexit Party since the leadership race kicked off, new poll reveals

The Tories have clawed back support from the Brexit Party since the race for Number 10 got underway, polling data has revealed, but almost two thirds of voters do not trust Boris Johnson.

The Conservative Party sunk to just 17 per cent in the polls immediately after Theresa May quit as leader on June 7 while Nigel Farage's party was riding high on 26 per cent.

But the Tories have steadily regained some of their popularity since then, with the latest YouGov poll putting the party top on 25 per cent with Mr Farage's new political vehicle having dropped to 19 per cent.

The data shows the Conservatives have been reinvigorated by the contest to replace Mrs May as Mr Johnson and rival Jeremy Hunt have battled it out for the top job.

YouGov polls show the Tories have been clawing back support from the Brexit Party since the leadership contest began - but the wider public does not have much trust in Boris Johnson

However, a separate YouGov poll suggests Mr Johnson, the overwhelming favourite to be installed as the new PM next Wednesday, will have a lot of work to do to win over the country if and when he takes office.

The survey found that 58 per cent of voters said Mr Johnson cannot be trusted while just 21 per cent said he can be. Some 21 per cent said they did not know either way.

Meanwhile, supporters of the Conservative Party are split right down the middle on the same issue with 40 per cent saying they trust Mr Johnson compared to 37 per cent who said they do not.