Treasury warns Brexit could hit public finances by £36bn a year – but eurosceptics blast "shameful" use of government resources

George Osborne says Brexit would cause UK to "lose tens of billions of pounds in money for our public services" – but eurosceptic MP Bernard Jenkin says chancellor “should be ashamed of himself” for ordering civil servants to draw up Treasury analysis

By Matt Foster

18 Apr 2016

A British exit from the European Union could hit the public finances by £36bn a year, according to new analysis by the Treasury – but campaigners backing Brexit have dismissed the claims and accused the government of abusing civil service resources.

A Treasury document published on Monday claims to offer a "rigorous and objective" analysis of the long-term impact of staying in the EU compared to the alternatives, ahead of the June 23 vote on Britain's place in the EU.

Among its claims, the Treasury says the hit to British gross domestic product (GDP) could range from 3.4% to 9.5% after 15 years, depending on the model the UK opts for after Brexit, and says that for each percentage point reduction in long-term GDP there would be a reduction in tax receipts of about £7bn.

David Cameron: pro-Brexit ministers will not receive civil service support
Sue Cameron: As the EU debate gets nasty, civil servants should be very, very afraid

The document therefore adds: "It is estimated that in the least worst case, leaving the EU would lead to a reduction in GDP of 3.4% in 15 years time, leading to a loss in public sector receipts of about £24 billion every year. Under the most pessimistic case of a long-term loss in GDP of 9.5%, the loss in receipts could be as high as £66 billion every year."

The Treasury's central forecast – based on Britain negotiating a Canada-style bilateral agreement with Europe – is for GDP to be 6% lower, with tax receipts to take a £36bn-a-year hit.

Launching the paper, chancellor George Osborne said: "If we left the EU, we’d lose tens of billions of pounds in money for our public services, because our economy would be smaller and our families poorer.

"The most likely bill our public services would pay if we left the EU is £36 billion. That’s the equivalent of 8 pence on the basic rate of income tax. Higher taxes and a smaller economy is not a price worth paying."

Osborne said the Treasury would also publish a study looking "in detail" at the "immediate shock" the UK economy would face if voters opt to leave.

But Bernard Jenkin – the eurosceptic Tory MP who chairs the Public Administration and Constitutional Affairs Committee, has said Osborne “should be ashamed of himself” for ordering the production of the document, and disputed the Treasury's key conclusions.

"This is all based on assumptions and assumptions assume some things go in straight lines and other things are variable or are adjusted to create different scenarios," he told the BBC.

"Well, nothing goes in straight lines, the British economy will become much more dynamic if we’re released from the prison of the European Union. And really it’s an abuse of the chancellor to use his officials for propagandist tactics like this.

"He would never be allowed to issue a forecast like this before a general election and this is an abuse of the fair rules for a referendum and he should be ashamed of himself."

Fellow eurosceptic John Redwood MP meanwhile said the Treasury's judgement "should not be trusted".

The new document comes after a row over the decision to send a leaflet to every home in Britain setting out the government's case for remaining in the EU, at a cost of £9.3m.

Eurosceptics have also hit out at cabinet secretary Sir Jeremy Heywood's guidance for civil servants in the run-up to the referendum, which places some curbs on the support given to ministers campaigning for Britain to leave the bloc.

Heywood has, however, pointed out that there is an official government position on the vote, and has said the rules will stop Whitehall "tying itself up in knots" and avoid putting officials in the situation of having to use public resources to campaign against the government.

Share this page