Britain could enter a technical recession – defined by two consecutive quarters of negative growth – by as early as next year, the National Institute of Economic and Social Research (NIESR) warned on Wednesday (7 September 2016).

In its latest gross domestic product (GDP) forecast, analysts at the think tank argued that "the probability of a technical recession before the end of 2017 remains significantly elevated". The last time the UK economy contracted for two consecutive quarters was in 2009, when GDP declined 1.8% and 0.3% in the first and second quarter respectively.

The report indicated Britain's economy had weathered the impact of the pro-Brexit vote and grew by 0.3% in the third quarter.

However, NIESR's estimates suggested the economy flatlined in July and August, meaning that once June's pre-referendum activity is no longer considered in the quarterly report, the pace of growth could fall close to zero.

The NIESR added that in the year to date, economic growth in the UK had been subdued compared with recent history, and the economy had been flat since April. "The evidence on the current state of the economy post-referendum is limited, but on balance these data suggest that the UK economy is in the midst of a slowdown," said NIESR's researcher Rebecca Piggott.

The report from the think tank comes on the same day figures released by the Office for National Statistics showed Britain's manufacturing sector suffered a sharp slowdown in the month following the referendum.

Manufacturing production slid by 0.9% in July compared with the month before, weighed by a decline in pharmaceutical output, compared with expectations for a 0.3% drop, and a 0.2% decline recorded for the previous month.

The latest release clashed with data released over the last seven days by IHS Markit, which showed all the three main sectors of the UK economy – services, manufacturing and construction – had recovered strongly from the post-Brexit uncertainty.