George Osborne Warns Of 'DIY Recession' If United Kingdom Votes For Brexit

George Osborne Warns Of 'DIY Recession' If United Kingdom Votes For Brexit

Quitting the European Union would plunge Britain into a year-long recession, George Osborne has warned.

The country would suffer an "immediate and profound" economic shock following a vote to leave that would be made worse by the negotiations that followed, according to Treasury analysis released by the Chancellor ahead of the EU referendum in one month today.

It shows that economic growth would be at least 3.6% lower following a Brexit win in the June 23 referendum but could plummet as much as 6%.

The stark warnings come on the back of alerts by Bank of England governor Mark Carney and the International Monetary Fund that quitting would leave the UK in the red.

Mr Osborne, who is visiting a business on the south coast with Prime Minister David Cameron to set out details of the Treasury study, will warn voters not to inflict a "do-it-yourself" recession on the country.

The Chancellor is expected to say: "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. The British people have worked so hard to get our country back on track. Do we want to throw it all away?

"With exactly one month to go to the referendum, the British people must ask themselves this question: can we knowingly vote for a recession?

"Does Britain really want this DIY recession? Because that's what the evidence shows we'll get if we vote to leave the EU.

"Yes, we've got improvements to make to the EU - but we know what they are and we're clear about what the future holds.

"If we remain, major British car manufacturers will go on selling hundreds of thousands of cars to Europe tariff-free.

"If we remain, British farmers will go on selling over 150,000 tonnes of beef and lamb to Europe tariff-free. That is the brighter future on offer for our country."

The Treasury report analyses the potential impact of Brexit on the economy in the two years after a vote to leave and looks at the transitional effect on trade and investment, the rise in uncertainty and financial market volatility.

It found the combination of factors would have a "damaging effect on both the demand and supply side of the economy".

Using "cautious" assumptions, with the UK entering into a new trade deal with the EU, it found GDP would be around 3.6% lower after two years compared to the forecast for continued growth after a vote to remain. A sharp rise in inflation would also be expected and house price growth faces being hit by 10%.

Under a "severe shock scenario", where Britain would leave the Single Market and default to World Trade Organisation rules, GDP would be 6% lower after two years and there would be a further increase in inflation, with a hit to house price growth of 18%.

The assessment found that even under the more conservative modelling, recession would be expected "with a significant risk that the outcome could be far worse" while remaining would see "current uncertainty fall back rapidly with little lasting impact on the economy".

Vote Leave said the analysis was "not an honest assessment".

Iain Duncan Smith said: "As George Osborne has himself admitted, the reason he created the independent forecaster, the OBR, was because by 2010 the public simply did not believe the Government's own economic forecasts.

"The Treasury has consistently got its predictions wrong in the past. This Treasury document is not an honest assessment but a deeply biased view of the future and it should not be believed by anyone.

"It is a fact that we hand over £350 million a week to the EU. If we Vote Leave we can take back control of that money and use it to help people here in Britain. We will also take back control over our economy creating hundreds of thousands of new jobs as we do trade deals with growing countries in the rest of the world."

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