A cocktail of Brexit misery awaits Britain in the new year as sluggish growth, higher shop prices and another cut in interest rates look set to hammer home the ramifications of the country's decision to quit the European Union.
Britons can look forward to "substantially weaker" growth, inflation as high as 3% and the Bank of England slashing interest rates to a fresh low of 0.1% within months, Morgan Stanley is warning.
British growth is expected to run "below potential" after Article 50 is triggered as a drop in investment, weaker consumption and rising inflation create challenging economic conditions similar to 2011 and 2012.
The US investment bank now expects growth to fall to 1% in 2017, which is "substantially weaker" than the Bank of England and Office for Budget Responsibility (OBR) forecasts of around 1.4%.
Morgan Stanley has previously been expecting 0.6% growth next year, but has revised its forecast on the belief that a "modestly stronger" pound will help temper inflation.
Still, weak sterling and higher energy prices could send inflation to a peak of 3% during the first half of 2018, higher than the Bank of England's projections for 2.7%, which both overshoot the Bank's 2% target.
UK inflation came in at 0.9% in October, according to the Office for National Statistics (ONS).
To compound matters, Opec's deal to cut oil production is likely to see motorists paying more to fill up their cars.
Morgan Stanley says Britain could experience "crunch points" in the Brexit negotiations that will lead to heightened volatility and prompt action by both the Government and Bank of England.
"We expect fiscal policy to accommodate the hit from Brexit, and borrowing to rise by a further £40 billion (cumulative) over the parliament compared to the new OBR forecasts, but we do not expect a large-scale stimulus package.
"Hence, we think that the BoE remains the first responder if the economy disappoints official forecasts - as we think it will," the research, led by Morgan Stanley economist Jacob Nell, said.
The Bank of England could cut interest rates as low at 0.10% in May 2017, Morgan Stanley added.
Uncertainty is then expected rise as the official exit date approaches, causing further economic weakness and policy easing, including a further tranche of quantitative easing (QE) - which sees the central bank print money to buy Government bonds - in the second half of 2018, the research explained.
The Bank of England ramped up its QE programme by £60 billion to £435 billion in August as part of its post-Brexit vote stimulus package that saw it cut rates from 0.5% to a record low of 0.25%.
Once the UK exits the EU, Morgan Stanley say the environment will "remain bumpy, below-par and prone to shocks for several years, including for a period after a detailed trade deal is agreed with the EU".
Business cycles are also likely to be "shorter and sharper".
Morgan Stanley admits that it was previously too pessimistic about the economic prospects after Brexit, but said this did not mean Britain should expect smooth sailing.
"We expected a substantial negative impact on the economy in the run-up to and aftermath of the referendum, and there is little evidence of any such impact."
It added: "Looking further ahead, given the unprecedented nature of Brexit, and the associated uncertainty over the pace and depth of adjustment, extra caution is clearly required."