[LONDON] Low-income households are set to be among the hardest hit if the UK votes to leave the European Union, according to the National Institute of Economic and Social Research.
In the worst-case scenario, different categories of poorer households could receive between US$2,692 and US$8,018 less in tax credits and benefit payments in 2020. That assumes Chancellor of the Exchequer George Osborne places the burden for repairing the public finances on welfare spending. Niesr said the fiscal deficit would probably be 2.3 per cent of gross domestic product larger in 2020, making it impossible for Mr Osborne to balance the budget as promised without further austerity.
"The effect on low-income families is likely to be large," Katerina Lisenkova, a research fellow at Niesr, told a press conference in London. "Low-income households could lose in two ways: their share of the loss of national income plus lower welfare payments." With just two weeks to go until Britons head to the polls, the rhetoric around the vote has intensified. Mr Osborne said yesterday that "there is a lot to be scared about" if Britain leaves the EU and analysis published by the Treasury last month showed the UK would face a yearlong recession if it chooses to leave the bloc.
Low-income households are "the most vulnerable, economically, so the impacts whether good or bad are likely to be the most extremely felt for those people," said Angus Armstrong, Niesr director.