BRITAIN could be faced with two more years of austerity if it votes to leave the European Union, the Institute for Fiscal Studies warns today.

The respected think-tank calculates that a Brexit vote could see public finances take a £20 billion to £40bn hit in 2019/20, if gross domestic product was 2.1 per cent to 3.5 per cent lower over the period, as predicted by another think-tank, the National Institute of Economic and Social Research.

Paul Johnson, the IFS’s director, said: "Getting to budget balance from there, as the Government desires, would require an additional year or two of austerity at current rates of spending cuts."

The think-tank said Britain could use its contribution to the EU - £8 billion a year - to help shore up its finances if it voted for Brexit but that this could be overshadowed by the negative impact on the UK economy with a 0.6 per cent fall in national income offsetting the benefits.

It also dismissed the Leave camp’s central claim that the UK would have an extra £350 million a week to spend if it left the Brussels bloc while stating that its £8bn Brexit saving would be halved if it followed in Norway's footsteps and joined the European Economic Area.

"The precise effects of leaving the EU on the British economy and hence the knock-on impact on the public finances is uncertain,” noted Carl Emmerson, the IFS’s deputy director and co-author of the report.

"But,” he added, “the overwhelming weight of analysis suggests that the economy would shrink by more than enough to offset the positive effect on the public finances of the reduced financial contribution to the EU budget."

Leading Outer, the energy minister, Andrea Leadsom MP responding for Vote Leave said it was no wonder people were being turned off the debate given the “continuous campaign to do down the British economy from EU-funded organisations”.

She claimed so many pro-EU studies were based on negative assumptions.

“If we Vote Leave, we can secure our economic security for future generations based on expanding our trade across the globe, turbocharging our economy and taking control of our borders. On June 23, the safer option is to Vote Leave,” added Ms Leadsom.

At Westminster today, UK and Scottish Government ministers as well as representatives from the In and Out campaigns will be cross-examined by MPs on the Commons Scottish affairs committee.