There Will Be Economic Consequences of Leaving the EU - It's Time Those Campaigning for Brexit Were Honest About It

21/05/2016 08:41 | Updated 21 May 2016

Boris Johnson has turned his back on London and on the needs of our economy. Businesses I have spoken to who are contingency planning for a possible Brexit knowing that job losses are on the horizon with a likely fall in demand have felt let down by the former Mayor in his final days.

The facts show British economy is in a fragile and vulnerable state. Recent statistics have shown our construction sector shrinking, and industry in recession. Our trade deficit has reached an eight-year low.

The consequence for millions of working families is slowing wage growth, fewer job opportunities, increasing insecurity.

George Osborne cannot shirk responsibility for this. He has failed on the fundamentals, with low saving, lagging investment, and poor productivity jeopardising future growth and prosperity.

That's why Labour is now focusing its efforts - as we will discuss at our "State of the Economy" Conference today - on how we can provide our industrial sector with more capital, provide stronger public support for research and development, and greater investment in education and training to create high-skilled jobs.

But the threat of Brexit is now adding to our woes, distracting debate from this essential task of building the balanced and sustainable economy that we so desperately need, and deterring vital investment in technology and jobs.

The Bank of England and the IMF have both made clear their honest assessment that the threat of Brexit poses a grave risk to our economy's short term stability and longer term potential.
The uncertainty created by a vote to leave could tip the economy back into recession. And the lost investment and trading opportunities would likely mean a permanent reduction in growth, jobs, wages, and the tax revenues we need to pay for public services.

Vote Leave would have you believe that any such warning is an interference in democratic debate, but in truth none have publicly answered the question about the impact of Brexit on the economy. Privately they admit there will be uncertainty and likely slowdown. Whether the "short term" hit will be two years, or the five to ten years economists have talked about, they do not know but want us all to take the gamble.

I know from my own many conversations with businesses that the consequences they warn of are all too real.

A businessman recently shifted his view from neutral to Remain following a chat with an Indian business that is delaying a decision to invest in the UK. Their reason? If we Brexit, it will give them access to talent from a population of around 60million. For them, thinking long term and investing billions, they are asking why they should close themselves off from access to talent from 500million people, and the benefits that cross border collaboration can bring from bringing together the best minds and skills to compete in the global environment of today. That's the reality of choices that investors are having to make, and the threat to our prosperity is real.

Those voting Leave must do so with their eyes open. The world post-Brexit won't be the same as it is now. There will be economic consequences, and it's time they were honest about it.

Seema Malhotra is the shadow Chief Secretary to the Treasury and Labour MP for Feltham and Heston

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