George Osborne: UK would be ‘permanently poorer’ outside EU

The UK would be “permanently poorer” outside the European Union, Chancellor George Osborne

has warned ahead of the in-out vote on membership on 23 June.

A Treasury analysis suggests an EU exit could see the UK economy 6% smaller than it would

otherwise be by 2030.

Mr Osborne said the smaller size of the economy projected in the report was the equivalent of

£4,300 per household.

Conservative MP John Redwood, who is campaigning for an Out vote, said: “This is a Treasury which

failed to forecast the huge damage membership of the European Exchange Rate Mechanism inflicted

on us and they were always very keen to join us and it gave us a huge recession. They failed to

forecast the damage to the UK of the Eurozone crisis of 2011.”

‘Economic shock’

But Mr Osborne defended the report’s findings on BBC Radio 4’s Today programme, saying: “The

conclusions could not be clearer. Britain would be permanently poorer if we left the EU to the tune

of £4,300 for every household in the country. That’s a fact everyone should think about ”

The chancellor said “it would be the poorest” who would be most affected by an EU exit, citing

people whose jobs “depend” on the car plants and steel making factories.

“They are the people whose incomes would go down, whose house prices would fall, whose job

prospects would weaken, they are the people who always suffer when the country takes an

economic wrong turn,” he said.

The chancellor later said in a speech in Bristol that EU membership had increased UK trade with EU

countries by about “three quarters”.

“Greater openness leading to higher productivity and rising living standards,” he said, adding that

the UK economy could be “4% greater” by staying in.

The 200-page Treasury document, written by government economists, also says there would be a

£36bn a year black hole in the UK’s public finances if the it left the EU.

BBC political editor Laura Kuenssberg said the figure allowed the Remain side to make the argument

that there would have to be big spending cuts or tax rises to plug the gap.

The report looks at three scenarios in the event of a vote to leave the EU on 23 June.

First, the UK gains a “Norway-style” deal and joins the European Economic Area (EEA)

Second, the UK executes a bilateral deal with the EU similar to the one being agreed with Canada – a

trade deal that has taken seven years to negotiate

Third, the UK has a trade relationship with the EU under World Trade Organization (WTO) rules,

similar to the relationship between the EU and countries like Russia and Brazil

Each scenario has a strong negative impact on the economy, according to the report, but the

forecasted 6% shock to national income is based on the Canadian trade model with the EU.

Leave campaigners, including London mayor Boris Johnson, have said there would be no downsides

to leaving, and suggested the UK could ape Canada’s trade arrangement with the EU.

‘Usual suspects’

But Mr Osborne said it was “economically illiterate” to say the UK could retain “all the benefits” of

EU membership and “none of the obligations or costs”.

Any trade arrangement would lead to less access to the EU single market unless Britain was

prepared to pay into the EU budget and accept the free movement of people, he said.

In his Daily Telegraph column, Mr Johnson said the referendum was on a “knife edge” and accused

the “usual suspects” of trying to convince Britons to accept “the accelerating loss of democratic self-

government as the price of economic prosperity”.

“a glorious future” outside the EU

“We have heard from the IMF (who got the Asian crisis completely wrong), as well as the banks and

the CBI, all of whom were wrong about the euro.

“Davos man – the kind of people whose club class air tickets are paid by the taxpayer, all the

lobbyists and corporate affairs directors of the big companies: they are all increasingly nervous that

they have been rumbled, that people can see the emperor has no clothes and that Britain could have

a glorious future outside the EU,” he said.

Andrew Mackenzie, head of mining giant BHP Billiton, said there would be a decade of uncertainty if

the UK voted to leave the EU, and that the country would be reduced to “rule takers”.

“On trade, the EU has negotiated broadly effective deals for Europe and the UK. Restoring these

agreements after Brexit would take years, perhaps a decade, of negotiation,” he said.