Finance Minister George Osborne is warning that Britain could plunge into a year-long recession if it votes to leave the European Union.
“The British people must ask themselves this question: can we knowingly vote for a recession?” Osborne said in excerpts of a speech he is due to make on Monday which were released by the finance ministry.
“Does Britain really want this DIY recession?”
Reuters is reporting that recent opinion polls have shown voters are leaning toward an “In” decision on June 23, with a month to go before Britons take their most important strategic decision in decades.
But pollsters say the outcome remains too close to call.
Osborne and Prime Minister David Cameron, who are leading the “In” campaign, have stressed the risks of a so-called Brexit for Britain’s economy, forecasting lower living standards, a fall in house prices and higher shopping bills.
The new analysis by the finance ministry of the referendum’s short-term implications for economy set out two post-Brexit scenarios.
A milder ‘shock’ scenario, based on Britain reaching a trade deal with the EU, would result in the economy being 3.6 percent lower after two years than it would be if Britain stayed in the EU, the ministry said. Inflation would rise and house prices would be 10 percent lower than under an “In” vote.
The economy would suffer a more severe shock if Britain left the EU’s single market, as suggested by some leading “Out” campaigners, and defaulted to World Trade Organisation rules, which would raise barriers to trade.
Under that scenario, the economy would be 6 percent smaller within two years than if Britain voted to stay in the EU, inflation would rise more sharply and house prices would be 18 percent lower, the report said.
The rival “Out” campaign dismissed the new analysis as politically motivated.
“This Treasury document is not an honest assessment but a deeply biased view of the future and it should not be believed by anyone,” said Iain Duncan Smith, a former senior minister in Cameron’s Conservative government.
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