Brexit could create £100bn black hole in UK budget over the next five years

The country voted to leave the EU earlier this year

Brexit could create £100bn black hole in UK budget over the next five years

A European Union flag in front of Big Ben in London | Image: Daniel Leal-Olivas PA Wire/Press Association Images

The British Chancellor will admit the UK is facing a £100bn black hole in its finances over the next five years thanks to Brexit.

That is according to the Financial Times, which reports the Office of Budget Responsibility has drawn up the forecasts that Philip Hammond will present in next week's Autumn Statement.   

However, the newspaper's figures appear to have been calculated from recent reports by the Institute of Fiscal Studies (IFS) and PricewaterhouseCoopers (PWC) rather than a Treasury or OBR leak.

It is widely predicted due to the recent shocks of Brexit and the US elections, the UK can expect slower growth, higher inflation and weakened business investment and this will bite into tax receipts.

The Financial Times said: "Once converted by the OBR into likely tax revenues, the deterioration in the public finances will cumulate to around £100bn".

It is thought the Chancellor will attempt to stick to some of his inherited commitments to cut taxes as set out in the Conservative's 2015 manifesto.

It means borrowing is likely to increase and instead of a surplus in 2019-20 as promised by his predecessor George Osborne, there will be a sizeable deficit.