The UK's fiscal watchdog, the Office for Budget Responsibility, says a no-deal Brexit will add around £30 billion a year to British government borrowing, with net debt rising by around 12% of GDP after three years. 

It also said that UK growth in the second quarter has "paused at best" and the country may be facing a recession. 

The OBR forecast is based on the IMF scenario for a disorderly Brexit published in April. 

That scenario was described by the OBR as "relatively benign", and not necessarily the most likely scenario, including as it does a relatively short disruption to trade flows at borders.

Today's update is a worsening of the OBR's last Brexit-related forecast, issued in March, which was based around the UK leaving the EU with a deal. 

But since then the two contenders to replace Theresa May as Conservative leader and Prime Minister have shown "willingness to explicitly countenance a no-deal exit on October 31", leading the OBR to issue an updated assessment of the fiscal cost of Brexit. 

The watchdog also criticises Boris Johnson and Jeremy Hunt for making a series of uncosted proposals for tax cuts and spending rises that "would be likely to increase government borrowing by tens of billions of pounds if implemented". 

It says all the signs point to a fiscal loosening and "less ambitious objectives" for the management of the public finances. 

Of the candidates' spending plans it says "it is not the role of the OBR to say what the government's fiscal targets should be nor how much budgetary loosening or tightening it should undertake. 

"But it must be understood that additional tax cuts or spending increases would push government borrowing and debt up from the levels expected in our forecasts and that there is no war-chest or pot of money set aside that would make them a free lunch," the watchdog said. 

"The Government does have room for manoeuvre against its 'fiscal mandate' for structural borrowing next year, but that does not provide an anchor for medium term tax and spending decisions," it added. 

The assessment is part of a wider Fiscal Risk Report, the agency's second, which looks at shocks and pressures facing the UK economy in the medium term. 

Among them is an increase in health spending of £27 billion a year, announced last year. 

In remarks that echo their Irish colleagues in the Fiscal Advisory Council, the OBR said the health spending increase announcement - "unfunded, unaccompanied by detailed plans for reform and outside the normal timetable for spending decisions - has cast doubts over the Treasury's usually firm grip on departmental spending".