In the second quarter this year, the U.K. grew by a better-than-forecast 0.6 percent, according to the first official estimate out since the Brexit vote. The figure, from the Office for National Statistics, was based on data from the three months ending June 30, with the referendum taking place on June 23.
"Uncertainty will persist over the next couple of quarters rather than decay … The decline in business investment is expected to continue into the second half of the year and into 2017," Kirby said.
Like the IMF, NIESR forecast the U.K. economy would grow by 1.7 percent for 2016 as a whole. The U.K. institute is more negative about 2017, seeing 1.0 percent growth, rather than the 1.3 percent expected by the IMF.
It also cuts its growth forecast for the euro area to 1.3 percent from 1.7 percent.
The institute also warned that greater "balkanisation" of the European Union and its financial industry would put pressure on Europe's biggest banks — some of which remain fragile, particularly in Italy.
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