UK would enter year-long recession after Brexit, says Treasury
Britain would enter a year-long recession with a 3.6% growth slump and 500,000 jobs lost if it left the European Union, according to a Treasury analysis.
The country would suffer an "immediate and profound" economic shock of its own making, the analysis states. The report comes one month before the June 23 referendum on Britain's EU membership.
UK Finance Minister George Osborne said said the UK had "one month to avoid a DIY recession".
"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," he said.
The Treasury's "cautious" economic forecast covers the two years following a vote to leave - which assumes a bilateral trade agreement with the EU would have been negotiated.
There would also be a sharp rise in inflation and house price growth would be hit by 10%, it claimed.
A second, "severe shock" scenario, also modelled by the Treasury, predicts what would happen if Britain left the EU's single market and defaulted to World Trade Organization membership.
In this scenario, after two years, GDP would be 6% lower and there would be a further increase in inflation, with a hit to house price growth of 18% and 800,000 jobs lost, it predicts.
The Vote Leave campaign rebutted the Treasury's latest analysis as "fantastical".
Former cabinet minister Iain Duncan Smith said he did not believe there would be any "economic shock" from leaving, citing economists who have argued the economy would be able to add nearly a million new jobs.