A no-deal Brexit could increase public borrowing by £30 billion a year compared to leaving the EU with a deal, according to a report from the Office for Budget Responsibility (OBR).

This is based on the assumption that a no-deal scenario could cause a recession, as "heightened uncertainty" would deter investment, while higher trade barriers with the EU would "weigh on exports".

It said public sector net borrowing would be almost £51.3bn in 2020/21, compared with its forecast of £21.2bn if the UK leaves the EU with a deal.

The report emphasised this was a "stress test" for what could happen in the event of a no-deal, rather than a definite prediction.

It said "our goal is to illustrate what could happen to the public finances, not necessarily what is most likely to happen: it is a scenario, not a forecast".

However, it also said it was "by no means a worst-case scenario".

With the UK set to leave the EU on 31 October 2019, businesses have been urged to prepare in case of a no-deal.

The Institute of Directors said 23% of its members had activated contingency plans between January and April 2019, but only 4% had used the extension of the Brexit deadline to increase their preparations.

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