UK warned of Brexit consequences

IF BRITAIN leaves the European Union its economy could shrink by 6% by 2030, the finance ministry warned in a report yesterday that was dismissed as scaremongering by eurosceptics.

The report said a Brexit would cause “permanent” economic damage as Britain would never be able to negotiate quotafree, no-tariff access to the single market if Britons vote to leave in a June referendum.

“The conclusion is clear: for Britain’s economy and for families, leaving the EU would be the most extraordinary selfinflicted wound,” Chancellor of the Exchequer George Osborne wrote in The Times.

“There would be less trade, less investment and less business . . . Leave the EU, and the facts are: Britain would be permanently poorer,” he said.

Under all the Brexit scenarios examined, Britain would have a “less open and interconnected economy”.

“It’s a complete fantasy to suppose that there is some radically different other arrangement that Britain could negotiate, where we have access to the single market but don’t accept any costs or obligations of EU membership,” Osborne wrote.

The 6% economic drop forecast was based on the assumption that in the event Britain left the bloc, it would negotiate a trade deal similar to the EU-Canada pact, according to extracts from the report.

The agreement with Canada will remove most duties between the EU and Canada by 2023 and allow EU companies to bid for public contracts in Canada.

The UK Treasury’s 200-page report has been months in the making and is the latest stark warning from the government ahead of the June 23 referendum.

The polls show the two camps neck and neck, while around a fifth of voters remain undecided.

The run-up to the referendum is being closely watched across Europe and beyond because of its potentially far-reaching economic and political consequences. The Treasury report is being published just days before US President Barack Obama is due in London on a visit in which he is expected to underline the importance of Britain staying in the EU.

The world’s G20 top economies last week warned that one of the risks to the global economy was “the shock of a potential UK exit from the European Union”.

John Redwood, a pro-Brexit lawmaker and former government minister, dismissed the Treasury analysis, comparing it to arguments made in favour of staying in the EU’s Exchange Rate Mechanism.— AFP