A fiscal stimulus to help the economy weather a no-deal Brexit would see debt climb to nearly 90% of national income for the first time since the mid-1960s, raising the prospect of sharp cutbacks to spending in future years.
Debt is projected to rise substantially in that scenario, climbing to nearly 90%of annual economic output for the first time since the mid-1960s, as the government borrows more to increase spending and kickstart economic growth.
In its Green Budget report, the think tank said: "Given the massive uncertainty over the direction of the economy and public finances, it is hard to conceive of a set of fiscal rules in the short term that would be appropriately constraining and give the chancellor flexibility to respond to bad economic news".
Even then, the economy would still enter recession in 2020.
In the case of a no-deal Brexit, it should implement "carefully targeted and temporary tax cuts and spending increases where it can effectively support the economy", he said.
It will continue to closely monitor the effects of the temporary tariff regime on the United Kingdom economy and has announced an exceptional review process will be used to make changes to the temporary tariff regime if necessary after exit day. Not only is every spending department about to see a budget increase, we have a Conservative government set to increase day-to-day spending on public services to a level far closer to what Labour promised in its 2017 manifesto than to what was implied by the Conservative manifesto. "In so doing, we will retain a fiscal anchor to public spending so that decisions are taken with a view to the long-term sustainability of the public finances".
"A no-deal Brexit would likely require a fiscal short-term stimulus followed by a swift return to austerity", IFS deputy director Carl Emmerson said.
Prime minister Boris Johnson has also emphasised the importance of government spending programmes being temporary, should the economy not perform as well as expected.
"An economy that turns out smaller than expected can, in the long run, support less public spending than expected, not more", he said.
He said: "Business investment is up to 20 per cent lower than it would otherwise have been, hurting productivity and wage growth".
Of the other scenarios analysed, the IFS found revoking Article 50 would be the best option for the economy, while further delays would suppress economic growth to below 1% in 2020 and less than 1.5% in 2021 and 2022.
The UK economy is already 2.5% smaller than it would have been had voters chosen three years ago to remain in the European Union, according to Citi's chief UK economist, Christian Schulz.
"But with the chances of us leaving in less than four weeks without a deal increasing by the day, the Prime Minister has missed a real opportunity to back British farmers".