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UK economy faces permanent hit with Brexit: Osborne

Monday, April 18, 2016 - 07:06

[LONDON] British finance minister George Osborne said a vote to leave the European Union in a referendum in June would do permanent damage to the country's economy, which he warned would be 6 per cent smaller by 2030 than if it stayed in the bloc.

The government is due to present on Monday a "serious, sober analysis" of the long-term economic impact of a so-called Brexit, a source familiar with the document said.

Mr Osborne was quoted as saying the loss to the economy would be the equivalent to each household of 4,300 pounds (S$8,280) a year by 2030.

"The conclusion is clear: for Britain's economy and for families, leaving the EU would be the most extraordinary self-inflicted wound," he wrote in a column due to be published in The Times on Monday and which the newspaper reported on Sunday.

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Opinion polls have shown the rival campaigns running almost neck and neck, although gambling firms predict that British voters are more likely to decide to keep Britain in the EU at the June 23 referendum.

Mr Osborne said the hit to the economy of a vote to leave would be permanent because of lower trade and investment.

The latest appeal by Mr Osborne, an ally of Prime Minister David Cameron, for Britons to vote to stay in the 28-member bloc is likely to spur accusations from "Out" campaigners that the government is using scare tactics.

One of the leading "Out" campaigners, London Mayor Boris Johnson, wants Britain to strike a trade deal with the EU similar to that reached between the bloc and Canada.

But Mr Osborne said that kind of agreement would leave Britain's economy 6 per cent smaller by 2030 than if it stayed in the EU.

Mr Osborne and Mr Johnson are rivals to become Britain's next prime minister.

With Britons divided over whether to stay in the EU, those campaigning to leave, including some of Mr Cameron's top ministers, have said the government is selling Britain short by saying it cannot stand alone.

But the Treasury's words chime with those of other economic institutions, such as the International Monetary Fund, in warning that Britain could deal a damaging blow to the fragile global economy if it votes to leave the bloc.

Last week, Mr Osborne said Britain's homeowners could face higher borrowing costs if there was a British exit.

In his newspaper column, Mr Osborne said every alternative to EU membership would leave Britain with an economy that was less interconnected with the rest of Europe and countries beyond.

US President Barack Obama is expected to say during a visit to Britain this week that he believes the country is better off economically and politically if it stays in the EU.

REUTERS

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