If the UK leaves the European Union retail sales will fall by 3% in 2017 amid a “short and relatively sharp retail shock,” according to the Economist Intelligence Unit (EIU), the research division of the Economist Group.

A new EIU report found that retail sales in the event of Brexit would be 6% lower in 2020 than if the UK votes to remain in the EU on 23 June.

The report, entitled Out and down: Mapping the impact of Brexit, concluded that leaving the EU would cause an economic shock and create a period of uncertainty, while also potentially increasing red tape for retailers.

“Consumers will retrench and consolidate income and expenditure as they watch and wait on the outcome of negotiation. The value of sterling will fall which, at the very least, means that prices will rise in line with the cost of imports,” it said.

In addition, regulatory requirements relating to safety, quality and consumer protection that are currently consistent across EU members states will diverge.

“This will force retailers to consider two sets of rules when assessing their offering between the UK and Europe. Rather than cutting red tape Brexit could make the situation even more complex for retailers seeking to offer comparable services across countries,” according to the report.

Opting out of the Common Agricultural Policy could affect agricultural supply chains for British farmers, it added.

However, there may be some “silver linings” for retail outside the EU, with a pro-Leave cabinet putting focus on business- and investment-friendly policies which could benefit some retailers. “However, in economic terms the policies enacted would be limited and the beneficiaries would be in distinct minority,” the report said.

“The economic reasons to stay for retail far outweigh those to leave,” it concluded.