Report on Possible EU Exit: ‘Britain Would Be Permanently Poorer’

(Bloomberg News/TNS) -

Leaving the European Union would be an economic blow that would shrink Britain’s economy 6 percent by 2030, according to a Treasury analysis produced as the government attempts to dissuade the electorate from voting to quit the bloc.

The details were being published by Chancellor of the Exchequer George Osborne on Monday. The first week of formal campaigning ahead of the June 23 referendum sees the government turn its biggest guns on the arguments advanced by those backing a so-called Brexit.

“These people who go around saying you can have all the benefits without any obligations, that’s economically illiterate and it frankly totally misunderstands the nature of the relationship Britain might have outside the EU,” Osborne told BBC Radio 4’s “Today” program on Monday. “The Germans or French wouldn’t give that to us because it’s a better deal than Germany or France get.”

Osborne’s intervention comes a day after French Economy Minister Emmanuel Macron told Britain that outside the EU it would be “completely killed” in trade talks with countries such as China, and days before President Barack Obama is due to visit the U.K. and offer his own warning against leaving.

The report argues that an exit would cause permanent rather than temporary damage to the economy due to lower trade and investment, which would cut government income at “enormous costs” to public spending, such as on the state-run National Health Service and defense, Osborne wrote in an article in the Times newspaper.

A Canadian-style post-Brexit agreement with the EU, as advocated by some campaigners to leave, would shrink gross domestic product by more than 6 percent, making each household $6,000 a year poorer by 2030, he wrote.

“Leave the EU, and the facts are: Britain would be permanently poorer,” Osborne wrote. “Britain’s families would be permanently poorer too.”

John Redwood, a senior Conservative member of Parliament who has long argued Britain should leave the EU, rejected the analysis.

“It’s an absurd claim from the Treasury,” he told the BBC. “I’m very sorry that they’ve degenerated to these levels. Germany has made it very clear they don’t want new barriers in the way of their very successful export business to Britain.”

Redwood offered his own vision of a post-Brexit Britain: “We’re going to be better off, we’re going to banish austerity, we’re going to spend our own money, we’re going to have the power to make our own laws, we’re going to control our own borders.”

Monday’s report is the latest in a series of economic warnings issued by Prime Minister David Cameron’s government as it seeks to convince voters to remain in the 28-nation bloc. It will counter claims by campaigners for Brexit, including Justice Secretary Michael Gove and Mayor of London Boris Johnson, that leaving the EU would free up billions of pounds for the NHS and other public programs.