UK’s Osborne warns voters of Brexit’s permanent hit to economy

 

British finance minister George Osborne told voters that leaving the European Union would cost them thousands of pounds a year and sap funding for public services because it would do permanent damage to the country’s economy.

In a move likely to grab the attention of many Britons, who remain split on whether to stay in the bloc, Osborne pointed to Treasury figures which said breaking away could cost each household 4,300 pounds ($6,100) a year by 2030.

Three days after official campaigning began for the EU membership referendum on June 23, Osborne said all alternatives to staying in the union would leave Britain’s economy smaller than if it stayed in the world’s biggest trading bloc.

Leading institutions and economists have warned about the short-term economic harm a so-called Brexit could cause but have been more reticent about the longer-term effect.

Anti-EU campaigners dismissed the Treasury’s estimates as worthless, but Osborne sought to hammer home his message that a Brexit would be felt by ordinary Britons.

“Britain would be permanently poorer if it left the European Union. Under any alternative, we’d trade less, do less business and receive less investment,” Osborne said.

“And the price would be paid by British families. Wages would be lower and prices would be higher,” he said in a speech at a research center specializing in composites for the aerospace industry which has deep ties with other EU countries.

Most opinion polls show the rival campaigns running neck and neck although one published on Monday showed the “In” campaign had kept a seven percentage-point lead.

Another poll last week showed just how sensitive voters are to what a Brexit meant for their own finances. Pollster YouGov said respondents who were evenly split shifted to 45-36 percent in favor of staying the EU if they were told that the cost of a Brexit for them would be 100 pounds a year.

CANADA-STYLE DEAL

Brexit supporters accuse the government of running a scare campaign. They say a post-EU Britain would flourish as it pursued its own trade deals and dropped rules and regulations.

Osborne tried to dismantle those arguments on Monday, saying that even the least disruptive Brexit option for Britain studied by his ministry – a deal with the EU similar to Norway’s access to the bloc’s single market – would mean the economy would be nearly 4 percent smaller by 2030 than if it stayed in.

One of the leading “Out” campaigners, London Mayor Boris Johnson, has sketched out a different future for Britain, citing the trade deal reached by Canada with the bloc which could free Britain from contributing to the EU budget and end its obligation to keep its borders open to all EU workers.

Osborne, a rival of Johnson’s for the future leadership of the Conservative Party, said that kind of deal would not cover Britain’s powerful services industry and would leave the economy 6 percent smaller by 2030, or 4,300 pounds per household.

That would cut government tax revenues by 36 billion pounds a year, or the same as its security and justice budgets combined, he said.

Osborne’s calculation of economic damage was based on the value of the estimated growth shortfall divided among Britain’s roughly 27 million households.

“Out” campaigners accused the government of resorting to unreliable estimates.

“We wouldn’t attempt to put precise numbers on the economy for 2030 because who knows what’s going to happen,” John Redwood, a Conservative lawmaker and a former minister, told BBC radio. “I think their 2030 forecast is completely worthless.”

Several international bodies, including the International Monetary Fund, have warned of the risks of a Brexit. Bank of England Governor Mark Carney, who has said Britain’s economy has benefited from being in the EU, is due to speak in parliament on Tuesday.

 
[Source:- Reauters]

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