UK Chancellor George Osborne has said that a new Treasury briefing paper shows that — if the UK left the EU — the economy would contract by 6 percent, the equivalent of US$6,100 per household, leaving a US$51 billion hole in public finances.
His projections have been described as "absurd" and "worthless" by anti-EU campaigners. Lawmaker Bernard Jenkin — who supports leaving the EU tweeted:
@bernardjenkin the Chancellor hasn't got a Budget forecast correct yet let alone a speculative hypothesis excluding the black economy— Jennifer Gamble (@Jennife63688764) 18 April 2016
The Treasury briefing concludes that Britain's membership of the Single Market has significantly increased trade and made Britain one of the top global destinations for foreign direct investment. Almost three-quarters of foreign investors cite access to the single market as a reason for their investment in the UK.
"The benefits come from the unique nature of the single market which not only removes tariffs and quotas, but also creates a customs union which reduces cross-border costs and reduces non-tariff barriers to trade such as regulations, standards and specifications which are the most significant impediment to trade for advanced economies like the UK," the report says.
Speaking at the launch of the briefing, Osborne said:
"Leaving the EU would be the most extraordinary self-inflicted wound."
However, the Treasury briefing — which Osborne says took months of preparation — flies in the face of a House of Commons briefing paper originally released in January 2016, which stated: "There is no definitive study of the economic impact of the UK's EU membership or the costs and benefits of withdrawal. Framing the aggregate impact in terms of a single number, or even irrefutably demonstrating that the net effects are positive or negative, is a formidably difficult exercise."
Many things will stay the same when we leave the EU: When we leave the EU we will not leave Europe. We will st… https://t.co/t3aaDIlgHX— John Redwood (@johnredwood) 15 April 2016
The briefing said this is because many of the costs and benefits are subjective or intangible. It is also because a host of assumptions must be made to reach an estimate. If the UK were to leave the EU, assumptions must be made about the terms on which this would be done and how the government would fill the policy vacuum left in areas where the EU currently has competence.
If the UK were to remain in the EU, assumptions would need to be made about how policy in the EU would develop. Estimates of the costs and benefits of EU membership are likely to be highly sensitive to such assumptions.
"This is an absurd claim from the Treasury and I'm very sorry that they've degenerated to these levels," said anti-EU lawmaker John Redwood.
"This is a Treasury which had to make huge changes to its forecasts for the next two years and just between November and March, because it decided its November forecast was completely wrong. We will be better off out. We will be richer and more successful."