The UK economy has a 50% chance of entering a recession over the next 18 months, the National Institute of Economic and Social Research said.
The institute forecasts the loss of 320,000 jobs by Q3 2017 and a rise in inflation to more than 3% late the same year due to an increase in the price of imports as a result of the weaker pound.
Decisive action from the Bank of England – a cut in interest rates to 0.1%, including a 25 basis-point cut this week, and a £200bn increase in government bond buying – could offset most of the impact of the Brexit vote, however.
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