The financial implications of a no-deal Brexit would be “calamitous”, leading to an long-term drop in economic activity in the UK.

That is the verdict of the man responsible for deciding how Lancashire County Council invests its cash.

Mike Jensen, the authority’s director of investments, was asked for his assessment of the potential impact of different Brexit scenarios when he appeared before the council’s audit, risk and governance committee.

He told members that the economic effects of leaving the EU would depend on “the shade” of the country’s departure.

“If we have a no-deal Brexit, I realistically expect to see negative interest rates in the UK,” he said.

“[In that situation], we’ll see a further 20-25 percent reduction in the value of the pound, which will bring an initial spike in inflation – but in the longer term, will cause economic activity to decrease,” said Mr. Jensen, speaking before Bank of England governor Mark Carney made a similar prediction about the inflationary impact of no-deal.

The meeting heard that any reduction in rates would actually allow County Hall to take advantage of its continued policy of short-term borrowing for capital purposes.

While rate falls would make investing money more challenging, that would be balanced out by a recent focus on longer-term investments, members were told.

Mr. Jensen also said that the cancellation of Brexit – which he did not predict to be likely – would instantly bring a “major bounce” to the UK economy, with much of the value of the pound lost since the EU referendum result “given back”.

“You would probably see…an initial drop in inflation because of the foreign exchange effect, but a longer-term increase because of the [resultant] increase in economic activity.

“I think there would be an increase in interest rates, but not that aggressively, because of the other global events which we have got going on at the same time which will create a limiting factor,” Mr. Jensen said.

Responding to the analysis given to the committee, James Barker, from the Brexit Party in Lancashire, said the focus should be on “factual evidence”.

“Britain is currently the only country in Western Europe showing signs of growth – Germany, Italy and the Southern European states are all showing signs of recession.

“We have seen our trade deficit with the EU going up for the last 15 years, so we import far more from them than they do from us – which is one of the reasons they are desperate for us not to leave.

“Before the referendum, we had Mark Carney and [then Chancellor] George Osbourne predicting half a million people being added to the dole queue and an emergency budget.   Did any of that happen? No.

“The City is performing better now than it did before the referendum – these are the economic facts rather than just conjecture,” Mr. Barker said.