Treasury report says Brexit would spark recession in UK

Leaving the European Union would destroy at least half a million jobs in the United Kingdom within two years, including 15,000 in Northern Ireland, according to an official treasury report on the short-term impact of a vote to leave on June 23rd. The report said leaving the EU would deliver a profound shock to the British economy, with economic growth falling by between 3 per cent and 6 per cent within two years.

Under the worst-case scenario, if Britain fails to agree a new trade deal with the EU within two years, the treasury says that more than 800,000 jobs could be lost. The report predicts a falling pound, higher inflation and food prices, lower wages and a fall in the value of property.

DIY recession

Launching the report at the headquarters of hardware retailer B&Q in Southampton,

David Cameron

said that leaving the EU would plunge Britain into what he called a DIY recession.

“As the Bank of England has said and the IMF has underlined, and the treasury has now confirmed, the shock to our economy after leaving Europe would tip the country into recession. This could be, for the first time in history, a recession brought on ourselves. As I stand here in B&Q, it would be a DIY recession,” the prime minister said.

“After all the pain, all the sacrifice by the British people, why would we want to put it at risk again? It would be like surviving a fall and then running straight back to the cliff-edge. It is the self-destruct option.”

The document identifies three scenarios for Britain’s negotiations with the EU after a vote to leave, concluding that each would have a negative impact on the economy.

Under the most benign scenario, Britain would negotiate a new deal with the EU within two years; in the next, Britain would need the agreement of other member states to extend negotiations beyond two years; and in the third, Britain would fail to reach an agreement with the EU and would rely on World Trade Organisation rules to regulate trade with the rest of Europe.

Former London mayor Boris Johnson, who is campaigning for a Leave vote, dismissed the report as propaganda that should be viewed in the light of the treasury's poor forecasting record.

“They are putting out more propaganda than we have seen at any time since 1992, when they said that we couldn’t leave the European exchange rate mechanism. They said it would be a disaster. They said that interest rates would go up. They said there would be an economic catastrophe for this country if we left the exchange rate mechanism. And what happened? It was a liberation for this economy. We did better than ever before. They were wrong then, my friends, and they are wrong now,” he said while campaigning in York.

Mr Cameron defended his decision to hold a referendum on Britain’s EU membership, despite the dire consequences he predicted if there was a vote to leave. “We have been in this organisation for 40 years, people of this generation have not been able to make a choice about whether to stay or to leave,” he said