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London - The UK government issued its starkest warning yet about the dangers of a vote to leave the European Union in next month’s referendum, saying a so-called Brexit risks causing a yearlong recession, sparking a decline in the pound and costing hundreds of thousands of jobs.
Britain’s gross domestic product in 2018 would be 3.6 percentage points lower than the current forecast, which is for a 4.3% increase, the Treasury said today in a document assessing the short-term economic consequences of a vote to leave the EU.
That’s under a “shock scenario” that the Treasury described as “cautious.” Inflation would accelerate sharply and house prices would stall. Under the “severe shock” scenario, GDP would be 6 percentage points lower than otherwise, and house prices would fall about 10 percent from current levels.
“With exactly one month to go to the referendum, the British people must ask themselves this question: can we knowingly vote for a recession?” Chancellor of the Exchequer George Osborne said in a speech in southern England today. “Does Britain really want this DIY recession?”
The chancellor was flanked by Prime Minister David Cameron. With the Conservative Party split down the middle and both men’s careers on the line, they are determined to emphasize the dangers of a vote to leave in the June 23 referendum.
In an illustration of the party divisions, Cameron’s former strategist, Steve Hilton, publicly supported the “Leave” campaign for the first time, while former Work and Pensions Secretary Iain Duncan Smith accused the government of focusing only on the negatives, saying they should have also outlined the potential positive impacts of a vote to leave.
“They have today chosen only to produce the downside,” Duncan Smith said. “That makes this report categorically unfair and biased."
