Recession warning as UK marks one month to EU vote

23rd May 2016, Comments 0 comments

Britain could be plunged into a year-long recession and lose hundreds of thousands of jobs if it left the European Union, the government said Monday, in a warning dimissed as "biased" one month before an in-out referendum.

Speaking at a hardware store, Prime Minister David Cameron said Britain risked sparking a "do-it-yourself recession" by voting to leave the bloc on June 23.

"The shock to our economy after leaving Europe would tip the country into recession," Cameron said, as the Treasury published its latest report into the potential consequences of a Brexit.

"It is the self-destruct option."

The study presented two potential short-term scenarios, predicting that gross domestic product (GDP) would be either 3.6 percent or six percent lower two years after a "Leave" vote than it would otherwise be.

There would be at least 520,000 and up to 820,000 jobs lost, sterling would fall by at least 12 percent and up to 15 percent, and house prices would fall by at least 10 percent and up to 18 percent, it said.

"With exactly one month to go until the referendum, the British people must ask themselves this question: can we knowingly vote for recession?" asked finance minister George Osborne at the same event in southern England.

But his former Conservative cabinet colleague and Brexit campaigner Iain Duncan Smith said the analysis offered a "deeply biased view of the future" that "should not be believed by anyone".

Duncan Smith said previous Treasury predictions had often been wrong and criticised the government for failing to publish details of any potential benefits of a Brexit.

"Every Treasury report has a central presumption from which there are downsides and then there are upsides," the former work and pensions minister told BBC radio.

"They have today chosen only to produce the downside. That makes this report categorically unfair and biased as a Treasury report."

- 'Hysterical claims' -

An earlier Treasury report into the long-term impact of a Brexit said households could be £4,300 (5,400 euros, $6,100) a year poorer after 15 years than they would otherwise have been.

The International Monetary Fund and the Bank of England have also warned of the economic consequences of leaving.

Leading Brexit campaigner Boris Johnson, the former mayor of London who is tipped as a future prime minister, hit out at the "hysterical claims" by "Project Fear".

In an article in the Daily Telegraph on Monday imagining how historians would look back on the debate, he suggested that "Project Fear turned out to be a giant hoax".

"The markets were calm. The pound did not collapse... and a new relationship was rapidly forged based on free trade."

The Vote Leave campaign claims that leaving the EU will save the equivalent of £4,600 for each household, based on Britain's contribution of £350 million each week.

Analysts say Britain actually contributes £280 million to the EU budget, taking into account its rebate.

- Turkey's membership -

Vote Leave marked the one-month milestone by launching a new poster campaign warning that "Turkey (population 76 million) is joining the EU", with the implication that many of those people will soon head to work in Britain.

Ending the mass migration from EU states to Britain has been a central theme of the "Leave" campaign.

Last week it published an analysis suggesting net migration would rise by five million by 2030 if Britain stayed in the EU, assuming that Turkey, Albania, Serbia, Montenegro and Macedonia all joined in the next five years.

Cameron dismissed the warnings about Turkey, telling ITV television on Sunday: "At the current rate of progress, they'd probably get round to joining in about the year 3,000."

An average of the last six polls by research project What UK Thinks puts "Remain" on 54 percent of support compared to 46 percent for "Leave", excluding undecideds.

© 2016 AFP

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