The Bank of England has warned the UK is already facing a one-in-three chance of a recession because of “Brexit uncertainties”, with far worse to come if there is a no-deal.

As Boris Johnson continued to ramp up preparations for a disorderly exit he previously put at a million to one, the Bank again downgraded its forecasts for economic growth. 

Governor Mark Carney said no-deal would be an “instantaneous shock” to the economy, devaluing the pound, depressing growth and increasing inflation.

The pound continued to fall in value, reaching its lowest level against the dollar since January 2017, making sterling the world’s worst performing major currency last month.

There was also alarm over a possible emergency budget in early October after the new Chief Secretary to the Treasury, Rishi Sunak, repeatedly refused to rule it out.

Read more: Boris Johnson to chair first Brexit strategy meeting as no deal plans get £2bn boost

Chancellor Sajid Javid also said there would be a budget “at some point” but people had to “wait and see”, despite it usually coming in November or December.

Paul Johnson, the director of the respected Institute for Fiscal Studies (IFS), said a pre-Brexit budget was “an extraordinarily bad idea”.

He added: “You can’t do anything very much that’s going to make a difference by the first week of November.”

It emerged last night that Mr Javid had ordered HM Revenue & Customs to make no-deal planning its “absolute top priority” ahead of the Government’s October 31 deadline.

The Chancellor wrote to HMRC chief executive Sir Jon Thompson demanding help for firms and taxpayers, as well as 5,000 additional staff and systems in place to “deliver a functioning regime” on Brexit day.

Last November, Sir Jon told MPs the date for putting in an optimal customs system for the UK in the event of no-deal “passed months ago”.

Treasury sources said the letter was intended as a wake-up call to “Whitehall’s unruliest department”.

The Bank cut its growth forecast from 1.5 to 1.3 per cent in 2019 and from 1.6 to 1.3% in 2020, on the assumption that there would be a Brexit deal and an orderly exit.

However, Mr Carney said the likelihood of no-deal had risen and “profound uncertainties” over Brexit and global trade were “weighing on the UK’s economic performance”.

The Bank left interest rates unchanged at 0.75% but said they could rise if inflation went up. Mr Carney said most large businesses said they were preparing for no-deal, but just one in five felt fully prepared.

The warning came as the Prime Minister chaired the Government’s Exit Strategy (XS) committee for the first time.

Mr Javid announced up to £2.1bn more for no-deal preparation this year, on top of £4.2bn already announced.

Around £1.1bn of the new money has been allocated to specific tasks, while the other £1bn will be available for contingency spending if required.

The spending measures include an unprecedented public information campaign of £138m, which dwarves the £9m then PM David Cameron spent in the EU referendum.

A further £434m has been allocated to stockpiling medicines, £344m for border and customs operations, and £108m for business support.

Mr Javid said: “We want to get a good deal that abolishes the anti-democratic backstop. But if we can’t get a good deal, we’ll have to leave without one. This additional £2.1bn will ensure we are ready to leave on October 31 - deal or no deal.”

Shadow chancellor John McDonnell said it was an “appalling waste of tax-payers’ cash” and “all for the sake of Boris Johnson’s drive towards a totally avoidable no-deal.”

SNP MP Stephen Gethins said: “Rather than working to avert a catastrophic no-deal exit, Boris Johnson is accelerating over the cliff-edge.

“The staggering £6bn for a no-deal Brexit is a shameful waste of money at the same time as Tory welfare cuts are increasingly driving people to foodbanks.”

Mr Johnson’s Brexit strategy of piling pressure on the EU27 to drop the Irish backstop made little progress, after his EU adviser David Frost held met officials in Brussels.

Asked if the UK had put forward any new ideas, a European Commission spokeswoman said: “This questions is best addressed to the UK authorities, if they have other proposals in mind. The withdrawal agreement is not up for reopening.”

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The hardline Brexiter Mark Francois also warned dozens of Tory MPs would block any attempt to rewrite the deal if it was reopened, saying Mr Johnson must stick by his promise that it was “dead”.

Irish PM Leo Varadkar said: “We should be afraid of a no-deal Brexit. [It] could have very serious impacts on the economy, north and south, and on Britain. It could have security implications as well and it could have constitutional implications.”

The uncertainty over the budget date echoed reports that the PM’s top political aide Dominic Cummings has already told civil servants to expect and emergency budget on October 7.

This would be the week after the Tory conference, and the apparent intention would be to ramp up pressure on the other EU 27 nations to agree to a last-minute deal.

But Paul Johnson said emergency measures to stimulate the economy to offset a no-deal shock of a no-deal, could make matters worse, by increasing imports through choked ports. 

He said: “A lot of the problems created by no deal will be supply-side issues – things getting stuck in ports or customs – and stoking up the economy when you have already got supply constraints is probably the last thing you want to do.”

The Bank of Scotland business barometer today reports business confidence among companies in Scotland returned to zero last month, after climbing to plus 17% in June.

Fraser Sime, of Bank of Scotland Commercial Banking, said: “Current political and economic uncertainties are clearly at the forefront of Scottish businesses’ minds.”

An Ipso Miro poll for the Evening Standard put the Tories on 34% on voting intentions, Labour 24% and LibDems 20%. However Mr Johnson’s personal ratings are worse than those for the last three PMs to take over mid-parliament - Theresa May, Gordon Brown and John Major - and his government the lowest rated of new government.

His political difficulties are set to increase today with the expected loss of the Brecon & Radnorshire seat to the LibDems in a byelection, cutting his working majority to one.