The Treasury has warned a vote to leave the European Union would trigger a year-long recession and a 3.6 per cent decline in economic growth.
According to the BBC, Chancellor George Osborne says in a Treasury study the UK would suffer an “immediate and profound” economic shock of its own making in the event of a Brexit.
The Treasury’s two-year economic forecast of what would happen after a vote to leave the EU – assuming a bilateral trade agreement has been negotiated – also predicts inflation would rise and house prices would be impacted by 10 per cent.
The Treasury also predicts what the impact of the UK leaving the EU’s single market would be, with the UK defaulting to World Trade Organisation membership.
In that situation, the Treasury says two years after the EU vote gross domestic product would be 6 per cent lower, there would be an 18 per cent hit to house price growth, and an increase in inflation.
Osborne is expected to say today: “It’s only been eight years since Britain entered the deepest recession our country has seen since the Second World War. Every part of our country suffered.
“The British people have worked so hard to get our country back on track. Do we want to throw it all away?”
However, former Cabinet minister and Vote Leave campaigner Iain Duncan Smith told the BBC: “As Osborne has himself admitted, the reason he created the independent forecaster, the Office for Budget Responsibility, was because by 2010 the public simply did not believe the government’s own economic forecasts.”
He adds: “This Treasury document is not an honest assessment but a deeply biased view of the future and it should not be believed by anyone.”