Brexit could cause 'severe' recession

The report claims that the most severe scenario following a ‘Brexit’ vote would see unemployment leap by 800,000, GDP fall by 6% and lead to an increase in borrowing and inflation.

Speaking at a press conference on 23rd May, Prime Minister David Cameron said: “This analysis shows the stark choice facing the British people.

“Even in its more cautious estimate, the Treasury finds that a vote to leave the EU would cause an economic shock that would tip Britain into recession and cost at least half a million jobs. 

“On 23rd June, people face a stark choice: economic security and a vote to remain, or a leap in the dark which would cost jobs and raise prices.”

David Cameron’s comments referred to two possible outcomes highlighted by the Treasury, a ‘shock’ or a ‘severe shock’.

The best case scenario would see house prices fall by 10%, sterling fall by 12% and public-sector borrowing increase by £24bn.

Average real wages would be nearly 3% lower, which is a pay cut of almost £800 per year for a full-time worker on an average wage.

In a severe shock result, house prices would fall by 18%, the sterling exchange rate would drop by 15% and public-sector borrowing would grow by £39 billion. 

The report claims that in the immediate aftermath of a Brexit, the UK would become less open to trade and investment, with income and household spending dropping as a result.

At the same event, George Osborne, Chancellor of the Exchequer, added: “We’ve spent six years dealing with what happens when recession hits this country – we’ve got one month to make sure we don’t do it to ourselves all over again.

“The Treasury analysis shows Britain will be stronger, safer and better off if we vote to remain in the EU on 23rd June.”