OXFORD’S economy is likely to suffer if the effects of Brexit lead to a national recession, city councillors were warned last night.

The possibility of BMW deciding later this year to manufacture its new electric Mini in Germany instead of in Oxford from 2019 is also outlined as a potential threat to the local economy.

Property funds, property investments, income streams and business rates could also be affected and stores could close, a report warns.

After Theresa May triggered Article 50 yesterday to start formal negotiations for Britain to leave the European Union, members of the council’s finance scrutiny panel were warned that the long-term consequences of Brexit could be harmful to the city.

In a report entitled The Implications of Brexit, the council’s economic development manager Matt Peachey told councillors that consumer confidence ‘does not appear to have suffered’ since the referendum, and the city could ‘in the short term weather any subsequent adverse Brexit impact’.

But he went on: “If the Brexit situation results in a national recession then we will not necessarily be able to continue to be immune from such an event and the impact of national chains going insolvent and closing stores.

“The latest news from BMW is also concerning and should this come to fruition there will inevitably be a significant impact on the city of Oxford across all sectors, the impact of which will be long lasting.”

City council Labour leader Bob Price said if companies like BMW relocated to Europe, income from business rates would significantly decrease.

He added: “A key concern for companies like BMW will be the administrative complexity of handling goods across frontiers.

“Parts come across the frontier four or five times - once you are out of the EU that process becomes complex and that could hit the supply chain.

“An impact on the free movement of labour could also have a harmful effect on the Oxford economy.”

The report added: “In recent announcements BMW are said to be looking at plants in Germany as alternatives to Oxford for the production of the new electric Mini and concerns relating to the possible impact of a hard Brexit.

“If production is moved away from Oxford the rating assessment could be drastically reduced.”

Labour MEP Anneliese Dodds said the tourism industry, the service industry and farming in Oxfordshire were more vulnerable than those elsewhere in the UK to a reduction in trade with the rest of the EU.

But David Ilott, who runs civil engineering firm IHS Systems in Kidlington and voted to Leave the EU, said Britain would gain trading opportunities with countries outside the EU.

He added: “Trade is up this year and I think the country has a good future outside the EU - Theresa May needs to dig her heels in to make sure we get the best possible deal in the negotiations.”