LEAVING the EU would be "a huge step into the unknown" for the UK, with most of the possible outcomes likely to result in lower GDP growth, an economic thinktank has said.

Even a run of opinion polls suggesting that voters may back Brexit in the upcoming referendum is likely to cause business uncertainty and prompt companies to hold back on investment decisions, said Oxford Economics.

The warning came in the annual Green Budget produced by the Institute for Fiscal Studies in association with Oxford Economics (OE), which predicted "significant uncertainty" during the two-year negotiation on exit terms which would follow a vote to leave.

The analysis found that after Brexit, damage to UK growth prospects was likely to be worse if the Government took advantage of new powers to restrict freedom of movement and clamped down on immigration.

OE is set to publish a report in March modelling nine possible scenarios following Brexit, which vary widely depending on future migration policies and the terms on which the UK is able to trade with the EU and the rest of the world after withdrawal.

Speaking at the launch of the Green Budget in London's Guildhall, OE's lead UK economist Andrew Goodwin said: "There are a vast range of possible outcomes, but it is very apparent that most of the scenarios in terms of Brexit fall on the downside.

"Most of them involve worse outcomes in terms of GDP growth than the baseline forecast.

"The less migration is restricted and the more the Government follows a free trade agenda, the less negative those outcomes are."

Mr Goodwin added: "I'm not sure any of the organisations advocating leaving the EU have actually told us what they'd like us to look like outside the EU. That means that there are nine different scenarios that we've had to cover to try and actually adequately cover all of those different possibilities. So it really is a huge step into the unknown."

In a chapter of the IFS Green Budget which he co-authored, Mr Goodwin found that the upcoming referendum - widely expected to be held in June 2016 - provides "the most immediate source of uncertainty" for the UK economic outlook.

"If the referendum were to result in a vote to leave the EU, the impact on the UK economy would be particularly uncertain," the report stated.

"The UK may only have two years to complete the process of withdrawal and, during this period, uncertainty over the UK's future relationship with Europe could damage investment prospects. Beyond that, much would depend upon what kind of trade deal the Government is able to agree.

"Our modelling work suggests that in scenarios where the Government adopts a more liberal and pro-business approach - i.e. limited restrictions on free movement of labour and more aggressive deregulation - there is less damage to UK growth prospects."

A spokesman for the Stronger In campaign said: "This is yet another blow for the Leave campaigns, as another economic body warns of the risks of Britain leaving the EU."

Advocates of Brexit were "promising the mother of all renegotiations, but cannot answer basic but fundamental questions on how the economic benefits of being in Europe could be replicated, let alone improved upon, on the outside", he said.