Brexit would put our economy in serious danger: article by David Cameron and George Osborne (Archived)
Writing in the Telegraph, the Prime Minister and the Chancellor explain the economic shock Britain would face after a vote to leave the EU.
In exactly 1 month’s time, Britain will vote in a referendum to decide whether to remain in the EU or leave it.
It will almost certainly be the biggest economic and political decision the British people will make in our lifetimes.
It is a question about the sort of country Britain wants to be in the world, and will affect families, jobs and the future of our country for decades to come.
We know many people are sceptical about the EU. That’s why any government either of us is a part of will always keep Britain out of the euro and the EU’s free border area.
But as Prime Minister and Chancellor, our first duties are to keep the country secure and do what we think is right for working people’s jobs, aspirations and living standards.
We know many people want more information before they make their minds up about how to vote.
One thing that is now clear, because Leave campaigners freely admit it, is that they want Britain to exit not just Europe but the single market.
That would mean turning our backs on the largest marketplace in the world – something Margaret Thatcher helped to create and Britain has championed ever since.
The evidence is unequivocal: that would put our economy in serious danger and make the country permanently poorer.
When this is being backed up by the International Monetary Fund, the OECD, the London School of Economics, 8 former US Treasury Secretaries, the President of the United States of America, businesses big and small, every one of our allies and trading partners and the Governor of the Bank of England, it isn’t a conspiracy but a consensus.
A few weeks ago, the Treasury published analysis which shows Britain would be worse off to the tune of £4,300 for every household every year by 2030.
Today, we are setting out our assessment of what would happen in the weeks and months after a vote to leave on June 23.
It is clear that there would be an immediate and profound shock to our economy.
The analysis produced by the Treasury today shows that a vote to leave will push our economy into a recession that would knock 3.6% off GDP and, over 2 years, put hundreds of thousands of people out of work right across the country, compared to the forecast for continued growth if we vote to remain in the EU.
In a more severe shock scenario, Treasury economists estimate that our economy could be hit by 6%, there would be a deeper recession and unemployment would rise by even more.
As the Bank of England has said, as the IMF has underlined, and now as the Treasury has confirmed: the shock of walking out of Europe would tip the economy into reverse.
This would be, for the first time in our history, a recession brought on ourselves: a DIY recession.
Under all scenarios the economy shrinks, the value of the pound falls, inflation rises, unemployment rises, wages are hit, and as a result – government borrowing goes up.
Sterling is projected to fall by 12%, consistent with a range of studies, and could fall by 15% in the event of a more severe shock.
Not only will holidays abroad be more expensive, but because the pound would be worth less everything we import would become more expensive, increasing inflation and hurting family budgets.
House price growth would be hit by at least 10% and as much as 18%, making homeowners poorer. There wouldn’t be good news for young people trying to get on the housing ladder, though, because mortgages would be harder to get and more expensive.
The shock would persist because the UK would become less open and less productive – cutting itself off from that free trade single market.
We can see that even the possibility of a leave vote has already caused uncertainty in the economy.
If we do vote to leave, that uncertainty will redouble. It won’t be easy to negotiate a new relationship with the EU, since that will require the approval of all other 27 member states. France and Germany have already been clear that the UK could not expect a deal better than they themselves have inside the EU and, like Norway and Switzerland, would have to accept free movement of people and pay in to the EU budget in order to access the free trade we need. We will also have to try to reach new agreements with over 50 other countries we currently enjoy trade deals with through the EU. It will take years – meaning years of uncertainty for our economy.
Economic uncertainty means businesses would reduce investment and cut jobs in the short term, which would mean households spending less too.
We are clear, as is the vast majority of the Conservative Cabinet: this is simply a price that is not worth paying.
Let’s not forget, it was only 8 years ago that Britain entered the deepest recession our country had seen since the Second World War. People suffered in every part of the country.
The British people have worked so hard to get things back on track.
The UK has been forecast to grow faster than any other G7 economy this year, we have the most competitive rate of corporation tax in the G20, and the employment rate has never been higher.
Why would we risk throwing it all away?
A vote to leave is a vote for recession. Do we really want that DIY recession?
Because that’s what’s in prospect if we vote to leave the EU.
And if we vote to remain?
Yes, there are improvements to make to the EU – but we know what they are and we’ll be at the top table fighting Britain’s corner.
If we remain, British car manufacturers will go on selling hundreds of thousands of cars to Europe tariff-free.
Farmers can go on selling over 150,000 tonnes of beef and lamb to Europe tariff-free.
Our economy won’t see hundreds of thousands of unnecessary job losses, but instead we’ll add a million or more jobs over the coming years.
So our message to Daily Telegraph readers is clear: vote Remain on June 23 to ensure security and prosperity for this generation, and opportunity for the next.
It’s a brighter future on offer.
Today’s Treasury analysis shows once and for all that Britain will be stronger, safer and better off if we remain in the EU.