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Retail sector failures could "multiply" it added, reaching levels "similar to those in 2008-2009".

While large retailers were expected to adjust to the weaker pound by sourcing goods from cheaper locations, it said: "Failures could increase among independent retailers due to their relative lack of bargaining power and extremely competitive trading conditions."

'Favourable' EU deal would leave migration elevated

Fitch said a "favourable" deal with the EU would limit the amount of market turbulence and could even result in "some restrictions on free movement of labour".

However, this would be offset by "loss of control over future changes in regulation" that would "increase the risk of the UK having to adopt EU regulation that is harmful for business", it said.

The rating agency added that net EU migration would fall over the medium term but "remain above" the Government's target of 100,000 a year.

Global banks such as HSBC and Barclays would increase their presence in the EU to reduce costs and maintain business relationships in the bloc, Fitch said.

However, it suggested that fears of a mass exodus of financial services to the EU if Britain secured favourable exit terms were exaggerated.

EU countries also hit hard by a Brexit

Fitch said Ireland, Malta, Belgium, the Netherlands, Cyprus and Luxembourg were the countries most exposed to the UK economy, and would be hardest hit by a Brexit.

All of these countries export goods and services to the UK worth at least 8pc of gross domestic product (GDP).

Economists at ING also calculated that a Brexit would deal an economic blow to the eurozone.

www.telegraph.co.uk/