The OBR had already forecast that output would fall by four per cent in the long run, compared to the country remaining in the European Union, if Britain secures a free trade agreement with the bloc. — Reuters pic

LONDON, Nov 25 — A failure by Britain to agree a free trade deal with the European Union would wipe an additional two per cent off the country’s economic output initially, the Office for Budget Responsibility said today.

The OBR had already forecast that output would fall by four per cent in the long run, compared to the country remaining in the European Union, if Britain secures a free trade agreement with the bloc.

It said it had now given a forecast for a no-deal exit given the continued uncertainty over the outcome of the negotiations, with Britain due to leave a status-quo transition period after Brexit on December 31 and the two sides yet to agree new trade terms.

"This would further reduce output by two per cent initially and 1.5 per cent at the forecast horizon,” it said. — Reuters