Britain's government stepped up warnings on Wednesday that a “no-deal” Brexit would hammer the economy, but acknowledged that Prime Minister Theresa May's plan, opposed by many on her own side, would also leave the economy worse off than staying in the EU.

In a scenario resembling the agreement May has struck with other European Union leaders, national output would be 2.1 percent smaller in just over 15 years' time than if Britain remained in the bloc, the government said.

But if there was no deal, it would be 7.7 percent smaller.

The report was seized on by opponents of Brexit, who said it undermined promises that leaving the EU would make Britain, and Britons, more prosperous.

“It took until this morning for the chancellor (finance minister) to finally admit it: We would be better off staying in the EU,” said opposition Labour lawmaker Alison McGovern. “He confessed that the government's deal would bring ‘impediments' to trade. That means a threat to jobs.”

The forecasts assumed for the purposes of comparison that there would be no changes to migration rules, but that some non-tariff trade barriers would be introduced.

However, perceptions that immigration was too high under the EU's freedom of movement policy were a key reason why many Britons voted in 2016 to leave the EU.

Assuming there was zero net migration from the EU in the future, the hit to the economy would be bigger: 3.9 percent under May's deal, and 9.3 percent without a deal.

Deep resistance

Four months before Britain is due to leave the EU, May is struggling to overcome deep resistance within her own Conservative Party and among other parties to the agreement she sealed with EU leaders on Sunday.

Finance minister Philip Hammond acknowledged that no Brexit option would be as good for the economy as staying in the EU, but said that May's plan “delivers an outcome that is very close to the economic benefits of remaining in.”

Wednesday's report said Britain's automotive and chemicals sectors faced the biggest potential losses from a no-deal Brexit -- more than 20 percent of output.

The message from the government was likely to be echoed by the Bank of England, which was due to announce its own shorter-term forecasts for the economy at 1630 GMT.

Both Hammond and BoE Governor Mark Carney have stressed the importance of a transition period, as included in May's plan, to ease Britain out of its four-decade membership of the EU.

Carney said last week that the impact of leaving the bloc without a transition could be akin to the 1970s oil crisis for the world's fifth-biggest economy.

But there remains a real prospect of a disruptive Brexit, given the scale of opposition to May's plan in parliament, where it faces a vote on December 11.

"Not scaremongering"

The government's forecasts also revived protests from supporters of a more definitive break from the EU, who had accused those who campaigned in 2016 to stay in the EU of ignoring the benefits and exaggerating the risks.

“Politically, it looks like a rehash of ‘Project Fear',” Dominic Raab, who resigned as May's Brexit minister earlier this month, told the Daily Telegraph, which reported the government report's forecasts overnight.

“People expect to be inspired, not scared witless into deferring to the government.”

But Hammond told BBC television: “I am not trying to scare anybody and I reject the term ‘scaremongering'.”

Brexit supporters say May's deal will in fact hurt Britain's economy over the long term by making it harder to strike trade deals with faster-growing countries and regions beyond Europe, and it is not clear that lawmakers will be swayed by the latest forecasts.

The BoE was due later to publish its assessment of the implications of different Brexit scenarios for interest rates and its oversight of the banking sector.

Carney has warned investors not to count on a cut to borrowing costs in the event of an economic shock, saying it could push up inflation sharply and damage growth.

Alongside its Brexit analysis, the BoE will publish its regular Financial Stability Report and the results of its 2018 stress tests of banks in Britain.