Britain's economy will grow faster than expected in 2016 and 2017, as newly optimistic economists reverse some of the downgrades made immediately after the Brexit vote.

A raft of strong economic data published since the vote has persuaded some analysts that a devastating economic crunch – predicted by then-chancellor George Osborne – is unlikely to strike the UK in the short term.

City economists now believe the UK will grow by an average of 1.6pc this year and 0.7pc in 2017, according to the Treasury’s latest study of forecasts.

That is still a slowdown from growth of 2.2pc last year, but is a marginally better outlook than the 1.5pc and 0.5pc average forecasts a month ago.

Barclays increased its 2016 forecast sharply from 1.1pc to 1.5pc, in part because of the strong second-quarter GDP figures, which show growth accelerated before the June 23 referendum.