BRITAIN is today warned that it faces a £25 billion “Brexit black hole” with the prospect of austerity measures stretching beyond 2020 after the Institute for Fiscal Studies predicted worsening public finances ahead.

As Philip Hammond prepares for his first Autumn Statement as chancellor in two weeks’ time, the leading economic think-tank said its analysis showed that lower growth forecasts would push up UK Government borrowing and debt.

By 2019/20 weaker growth could see tax revenues slump by £31bn compared to the forecast in this year's Budget, if financial policy remained the same.

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While the IFS pointed out this could be offset by a fall of £6bn in spending if the UK stopped payments to the EU budget, it nonetheless stressed how the overall impact of borrowing £25bn more than forecast in the Budget would signal a deficit of £14.9bn.

This would contrast sharply to the £10.4 billion surplus that George Osborne, the former chancellor, had targeted in his bid to balance the books by the end of the decade.

In the Commons, David Davis, the Brexit secretary, accused his Labour opponents of trying to “wreck” the UK Government’s negotiating strategy.

He told MPs: “We won't achieve a good negotiation outcome if this is a negotiation being run by 650 people in this House of Commons or nearly 900 in the Lords. No negotiation in history has been run that way.”

Earlier, Sir Keir Starmer, his Labour opposite number, made clear, that while the Opposition wanted to see the Conservative administration’s “basic plan,” it would not seek to block the process of triggering Article 50.

The London MP also suggested there should be “special arrangements” on Brexit for Scotland, Wales and Northern Ireland but did not elaborate as to what they should be.

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Meantime, Downing Street said the UK Government was confident it could get last week’s High Court ruling - that Westminster should vote on the Brexit strategy - overturned at the UK Supreme Court next month.

It is believed the Scottish Government is now highly likely to join the legal battle, arguing that Holyrood should be given a vote too. First Minister Nicola Sturgeon is set to discuss the issue with Lord Advocate James Wolffe.

In its predictions the IFS assumes that all the challenging spending cuts announced by Mr Osborne are able to be delivered, including £3.5bn of unspecified "efficiencies" pencilled in for 2019/20, but it does not take account of the income tax cuts promised in the Tory general election manifesto that have yet to be introduced.

Thomas Pope, a research economist at the IFS, suggested the new chancellor's first fiscal event would not be easy.

"Growth forecasts are almost sure to be cut, leading to a significant increase in the deficit even if all the very challenging spending cuts currently planned are in fact delivered. Given the levels of uncertainty, he might be wise to respond cautiously for now.”

Mr Pope added: "Any new fiscal targets should be reasonably flexible. Any decisions to increase spending or cut taxes in the short run should be taken in the knowledge that significant further austerity after 2020 looks to be on the cards."

Read more: Brexit could damage Scottish NHS, health secretary warns

Baroness Kramer for the Liberal Democrats said: "This Brexit black hole means having to take billions out of public spending or rapidly increase taxes. Yet the Government continues to pretend that all is well. They cannot keep ducking the question of how they are going to cope with the economic reality of Brexit.”

John McDonnell for Labour said the report further highlighted the past six years of Tory failure on the economy, which meant the UK economy was not properly equipped for any Brexit-induced downturn.

"It is time the chancellor learnt the lessons of George Osborne rather than repeat them," he added.

Labour’s Pat McFadden for Open Britain, which campaigns for the closest possible ties with the EU, said the IFS warnings underlined how important it was for the UK “not to damage the trading position it currently enjoys through membership of the single market”.