A vote to leave the European Union could result in two more years of cuts in government spending, the Institute of Fiscal Studies (IFS) has warned.
The think tank added to reports by the Bank of England and Treasury which claim the UK economy would fall into recession following a Brexit. The IFS said this would result in the government being forced to either make deeper budget cuts, or extend them at current levels by two years.
If the UK economy was 2.1-3.5% smaller, as forecast by the National Institute of Economic and Social Research (NIESR), the IFS would expect public finances to be £20-40 billion worse off by 2019/20.
Paul Johnson, IFS director, said: "Getting to budget balance from there, as the government desires, would require an additional year or two of austerity at current rates of spending cuts."
Mr Johnson said: "Leaving the EU would give us an immediate £8bn boost to the public finances [by not paying EU contributions], but the overwhelming consensus is that the economy would be smaller than otherwise following Brexit.
"If the economy is just a few percentage points smaller than it otherwise would have been, we will be a bit worse off."