The Office for Budgetary Responsibility (OBR) has warned that even a small hit to productivity caused by Brexit could cause a £97bn hit to the UK economy in the long-term, reducing tax receipts by £36 billion.
The OBR report also describes future tax receipts as being "particularly vulnerable" to the impact of Brexit on the financial sector, which could face up to 60,000 job losses.
The report warns that the Brexit negotiations could lead to "further uncertainty and investment volatility" following the recent fall in business investment, and that a "no deal’ scenario could have even bigger negative effects than those currently forecast.
Liberal Democrat Shadow Chancellor Vince Cable commented:
"This report lays bare the risk to our economy and public finances posed by this government's reckless approach to Brexit.
"Even a small deterioration in growth could mean billions of pounds less funding for our public services in the long-term.
"Theresa May has shown complete disregard for the economic consequences of the extreme Brexit she has chosen.
"This sobering warning from the independent Office for Budgetary Responsibility should serve as a wake-up call."