Voting to leave the EU would create years of uncertainty and potential economic disruption. This would reduce investment and cost jobs.
The Government judges that it could result in ten years or more of uncertainty as the UK unpicks our relationship with the EU, and renegotiates new arrangements with the EU and over 50 other countries around the world.
HM Treasury analysis shows Britain’s economy could be tipped into a year-long recession. At least 500,000 jobs could be lost and GDP could be around 3.6% lower following a vote to leave the EU than it would be if we remained in the EU.
Average real wages could be nearly 3% lower than if we remained in the EU, which would amount to a reduction of £800 a year for someone working full time on the average wage.
Treasury analysis also shows that if the UK leaves the EU, after 15 years this could mean:
- a cost per year equivalent to £4,300 per household in the UK
- a hit to tax receipts of £36 billion a year
- this is the equivalent of an extra 8p on the basic rate of income tax
Some argue that we could strike a good deal quickly with the EU because they want to keep access to our market. But the Government’s judgement is that it would be much harder than that – less than 8% of EU exports come to the UK while 44% of UK exports go to the EU.
No other country has managed to secure significant access to the Single Market, without having to:
- follow EU rules over which they have no real say
- pay into the EU
- accept EU citizens living and working in their country
A more limited trade deal with the EU would give the UK less access to the Single Market than we have now – including for services, which make up almost 80% of the UK economy. For example, Canada’s deal with the EU will provide limited access for services like air travel, broadcasting and banking. The deal has been seven years in the making, and is still not in force.
If the UK voted to leave the EU, we would lose access to trade agreements with more than 50 countries outside the EU. The UK would seek to renegotiate these deals, but this would take years and there is no guarantee that the UK would manage to negotiate terms as good as those we enjoy today.
The UK would miss out on the benefits of the trade deals currently being negotiated by the EU, including with the US and Japan. When these are successfully concluded our exports to the EU, plus other countries covered by EU trade deals, would account for 82% of total UK exports.