Brexit ‘would spark year-long recession’ according to British Treasury analysis

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File photo of British Chancellor George Osborne : Ben Birchall / PA Wire/Press Association Images
File photo of British Chancellor George Osborne : Ben Birchall / PA Wire/Press Association Images
Leaving the European Union would tip the UK into a year-long recession and lower Britain’s economic growth by 3.6%, according to Treasury analysis.

The country would suffer an “immediate and profound” economic shock of its own making, Chancellor George Osborne, who released the study, warned.

But Vote Leave’s Iain Duncan Smith said people would not believe the Treasury’s “deeply biased view of the future”.

It comes one month before the vote on Britain’s EU membership on 23 June.

The Treasury’s “cautious” economic forecasts of the two years following a vote to leave – which assumes a bilateral trade agreement with the EU would have been negotiated – predicts Gross Domestic Product would drop by 3.6% and push the economy into recession.

There would also be a sharp rise in inflation and house price growth would be hit by 10%, it claimed.

‘DIY recession’

A second, “severe shock” scenario, also modelled by the Treasury, predicts what would happen if Britain left the EU’s single market and defaulted to World Trade Organizationmembership.

In this scenario, after two years, GDP would be 6% lower and there would be a further increase in inflation, with a hit to house price growth of 18%, it predicts.
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Analysis By BBC political correspondent Tom Bateman

This is the second time the Treasury has released a major document used by remain campaigners to claim there will be serious damage to Britain’s economy in the event of a vote to leave the EU.

To vandalise a well-worn election slogan – it tells us that Stronger In’s referendum strategy is sticking with three priorities: The economy, the economy, the economy.

It became clear weeks ago the Remain camp’s playbook involved repeatedly trying to appeal to wavering voters with what were presented as sober economic assessments on the risks of leaving the EU.

Vote Leave are still fighting on this turf, but recent days have seen their campaign shift emphasis solidly to the issue of immigration – with what were claimed to be the risks of Turkish EU membership – a noticeable change of tack which fellow out campaigners in Ukip (not part of the officially designated campaign) had been calling for, believing it key to winning over undecided voters.
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Mr Osborne, who is due to visit a business on the south coast with the prime minister on Monday, is expected to warn voters not to choose a “do-it-yourself recession” for Britain.

“It’s only been eight years since Britain entered the deepest recession our country has seen since the Second World War. Every part of our country suffered,” he is expected to say.

“The British people have worked so hard to get our country back on track. Do we want to throw it all away?”

However, the Vote Leave campaign called the Treasury analysis “fantastical”, and said it had been “hopelessly wrong” in previous forecasts.

‘Worthless forecasts’

Former cabinet minister Iain Duncan Smith said: “As George Osborne has himself admitted, the reason he created the independent forecaster, the OBR [Office for Budget Responsibility], was because by 2010 the public simply did not believe the government’s own economic forecasts.

“This Treasury document is not an honest assessment but a deeply biased view of the future and it should not be believed by anyone.”

Leaving the EU would save Britain money, and allow trade deals with growing countries outside the EU which would in turn create jobs, he argued.

The Treasury says it modelled the impact of a leave vote by looking at three key factors: the “transition effect” of the UK becoming less open to trade; the impact of “uncertainty” on the economy; and the potential “volatility” of financial markets.

A previous Treasury report, which looked at the long-term effect of an EU exit, claimed households would be £4,300 a year worse off, and the economy 6% smaller by 2030.

Vote Leave also dismissed these estimates as “worthless” and “unbelievable”, saying “few forecasts are right for 14 months, let alone 14 years”.

Bank of England governor Mark Carney warned earlier this month that the risks of leaving “could possibly include a technical recession”.

And the International Monetary Fund’s chief Christine Lagarde has said a vote by the UK to leave the European Union would have “pretty bad, to very, very bad” consequences.

However, a group of eight influential economists from the group Economists for Brexit argue the UK economy would be boosted by 4% outside the EU.

Getting rid of EU trade barriers would also see consumer prices fall by about 8%, and boost the UK’s services sector, they said.
BBC

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7 responses to “Brexit ‘would spark year-long recession’ according to British Treasury analysis”

  1. 5thDrawer Avatar
    5thDrawer

    I suppose it’s largely about whether or not one thinks the most important thing in their lives is money.
    The ‘Global Concept’ is not popular with everyone.

  2. Matrix Avatar

    Britain was never really interested in European cooperation.
    Among other things , they want to retain the British Weights and Measures Act .

    To help ease the EC’s desired transition from sole use of imperial units to sole use of metric units, the directive permitted the use of what were termed “supplementary indicators” – the continued use of imperial units alongside the metric units catalogued by the directive (dual labelling). The initial intention was to prohibit dual labelling after the end of 1989, with metric units only being allowed after that date. This deadline was later extended: first to the end of 1999, then to the end of 2009.
    Finally, in 2007, the European Union (EU, as it had become) and the EC, confirmed that the UK would be permitted to continue indefinitely to use imperial units such as pints, miles, pounds and ounces as at present.
    The Gloucestershire County Council Trading Standards Department confirmed the EU ruling that the previous deadline for ending dual labelling had been abolished.

    As of 24 April 2012, there are still a few cases where imperial units are required to be used and where metric units are optional within the scope of the Weights and Measures Act. These are: the pint for the sale of draught beer and cider and of milk in returnable containers; miles, yards, feet and inches for road signs and distances; and troy ounces for the sale of precious metals. In addition, British law specifies which non-metric units may be used with dual labelling (for example the imperial gallon, but not the US gallon)

    They still drive on the left side of the road……

    It does not work in a Union that uses a standard accepted throughout the EU.

    1. 5thDrawer Avatar
      5thDrawer

      Wish Canada had just stayed with ‘Standard Measure’ … But Idiots (and British Haters) prevail.

  3. 5thDrawer Avatar
    5thDrawer

    Life for the ‘Lesser 90%’ in North Korea. (not as ‘regulated’ for ‘bottom Lebs’ ..)
    http://www.msn.com/en-ca/news/photos/how-north-koreas-privileged-elite-prosper-while-the-rest-struggle/ss-BBtpC0m#image=19

  4. Matrix Avatar

    Brexit ‘would not spark any tourists recession’.

    Given that the EU intends to introduce visa requirements for Canadian and US citizens, Britain will have more tourists…..

    Washington and Ottawa both demand entry visas from Romanians and Bulgarians, whose states joined the EU in 2007. The United States also excludes Croatians, Cypriots and Poles from a visa waiver scheme offered to other EU citizens.

    “A political debate and decision is obviously needed on such an important issue. But there is a real risk that the EU would move towards visas for the two (Americans and Canadians),” an EU source said.

    https://youtu.be/C9qYdALvFaU

    1. 5thDrawer Avatar
      5thDrawer

      Old stories … the world of anomalies … and towns built on changing lines of a map.
      Wait until you check out marriage rules … :-)))))

      1. 5thDrawer Avatar
        5thDrawer

        And when Privacy is unimportant to the ‘watchers’ ….
        https://www.youtube.com/watch?v=tV-wgZBGfCo

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