LEAVING the European Union could hit Britain’s economy, George Osborne has warned, after the latest growth figures showed a fall following a slump in the manufacturing and construction industries.

The message of caution from the Chancellor came as the West’s leading economic think-tank, the Organisation for Economic Co-operation and Development, claimed Brexit would cost British workers the equivalent of a month's pay by the end of the decade; around £2200.

The Leave campaign dismissed the OECD’s prediction, saying the think-tank was “in the pay of the EU” and had been “consistently wrong” on its forecasts on Europe.

Nigel Farage, the UKip leader, dismissed the range of international bodies coming out against Brexit, saying: "Yeah, yeah, yeah. IMF, OECD, a whole series of international organisations stuffed full of overpaid people who failed in politics mostly."

The Office for National Statistics (ONS) said gross domestic product (GDP) grew by 0.4 per cent in the first three months of 2016, down from 0.6 per cent in the fourth quarter of last year.

Mr Osborne said: "It's good news that Britain continues to grow, but there are warnings today that the threat of leaving the EU is weighing on our economy. Investments and building are being delayed, and another group of international experts, the OECD, confirms British families would be worse off if we leave the EU.

"Let's not put the strong economy we're building at risk, and vote to Remain on June 23."

The downward impact on UK growth was driven in part by a poor performance from the manufacturing industry, which fell by 0.4 per cent in the first three months of the year compared with a 0.1 per cent rise in the quarter before. Overall production was down 0.4 per cent between January and March.

The construction industry also dropped back in the first quarter, falling 0.9 per cent compared with an increase of 0.3 per cent in the fourth quarter.

But Britain's dominant services sector, which accounts for more than 78 per cent of the UK economy, made strong ground, lifting 0.6 per cent in the first quarter.

It came as the index for services showed that output increased by 0.1 per cent between January and February this year, the same level of growth as between December and January after the ONS revised down its figure by 0.1 percentage points.

Mounting gloom over the global economy, Britain's forthcoming referendum on Europe and market volatility have dealt a blow to business confidence in recent months.

It has left the Bank of England in no hurry to raise interest rates from 0.5 per cent, where they have remained since March 2009.

Last week, Bank governor Mark Carney warned that uncertainty around the EU referendum was beginning to hamper UK economic growth.

He reaffirmed concerns raised by the Bank's Monetary Policy Committee earlier this month, stating that there was "some softening in growth during the first half of 2016" due to uncertainty surrounding Britain's vote on the EU.

It came after the International Monetary Fund (IMF) downgraded its forecast for the UK economy over fears of disruption if Britain leaves the EU on June 23.

The IMF scaled back its projection for UK economic growth for 2016 by 0.3 percentage points to 1.9 per cent - marginally below the 2.0 per cent forecast of the Government's Office for Budget Responsibility - but held its forecast for 2017 at 2.2 per cent.

A series of industry surveys covering the manufacturing, construction and services sectors had already pointed to a slowdown in GDP in the first quarter of this year.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Concerns about Brexit likely played a role in the Q1 slowdown and they probably will take a greater toll on GDP growth in Q2.

"But the downward trend in GDP growth since 2014 suggests that the EU referendum cannot be blamed for all of the economy's ills.

"The fiscal squeeze has tightened this year after a pre-election pause, while the boost to growth in household spending from falling saving and rapid employment growth has run its course."

Robert Oxley for Vote Leader hit back, saying: “The OECD is in the pay of the EU. José Ángel Gurría is part of a global bureaucracy that feathers its nest with vast expenses claims paid for by taxpayers. OECD officials themselves avoid paying tax in most countries - he is in no place to lecture us about taxes.”

He pointed out how the OECD said the UK would reap “great benefits” from joining the ERM and recommended the country should join the euro. “So why should we listen to their doom-laden predictions about leaving the EU?” asked Mr Oxley.

He added: “After we Vote Leave and take back control we will be able to cut our tax bill because we will no longer have to fund overpaid and under taxed international bureaucrats in Brussels. This will be bad for fat cat officials but good for the British people,” he added.

The OECD said the impact of Brexit would be akin to imposing a tax on UK national income, creating a "persistent and rising cost" to the economy.

The OECD estimated by 2020 GDP would be more than 3.0 per cent down on what it would have been if Britain had remained in the EU; the equivalent of £2,200 per household at today's prices.

Under the OECD's "central scenario", by 2030 the loss of GDP would have risen to more than 5.0 per cent; a loss of £3,200 per household. In a more pessimistic scenario, however, the costs of leaving would be even higher, rising to £5,000 per household.

The think-tank said: "A UK exit would be a major negative shock to the UK economy, with economic fallout in the rest of the OECD, particularly other European countries."

In its analysis, the 34-nation OECD said that uncertainty about the outcome of the referendum on June 23 was already hurting business confidence, resulting in a weakening of UK economic growth.

If there was a vote for Leave, the short-term impacts would include a further heightening of economic uncertainty, leading to a tightening of financial conditions, with spending decisions held back as the cost of credit increased while availability reduced.

Mr Gurria said there was "no economic upside for the UK whatsoever" in leaving the EU and dismissed claims that it would enjoy a more liberal trade regime outside as a "delusion".

"The 'Brexit tax' would be a pure deadweight loss, a cost incurred with no economic benefit. And this tax would not be a one-off levy. Britons would be paying it for many years," he added.