Britain will be worse off by £4,300 a year per household if Britain votes to leave European Union, according to the Treasury.
The Treasury’s first piece of economic analysis on the EU referendum examines the impact of remaining a member of the EU compared to the alternatives: Membership of the EEA like Norway; a negotiated bilateral agreement, such as that between the EU and Canada; or World Trade Organisation membership without any form of specific agreement with the EU, like Russia or Brazil.
The data shows that using a negotiated bilateral agreement, Britain would be worse off by the equivalent of £1,800 every year for every man, woman and child in Britain after 15 years, and overall GDP would be lower by 6.2%.
The Treasury also predicts a “significant hit to tax receipts”, equivalent to an 8p increase in the rate of income tax.
Under WTO membership, annual loss of GDP per household would hit £5,200, while the central net effect on tax receipts would be £45bn, according to the study.
Citing reasons for the decrease, the Treasury predicts a Brexit would lead to lower trade and investment, which would in turn lead to lower productivity and “ultimately feed through into lower wages and living standards for working people, leaving the country permanently poorer”.
The research also shows that once all trade deals currently under negotiation are completed, more than 80% of UK trade will be with either the EU or through EU free trade agreements.
Chancellor George Osborne said: “In a little over two months’ time, the people of the United Kingdom will decide whether our country should remain in the European Union or leave it. It’s the biggest decision in a generation and will have profound consequences for our economy, for living standards and for Britain’s role in the world.
“The analysis shows that a vote to Leave would mean Britain would be permanently poorer, to the tune of £4,300 a year for every household. Under any alternative, we’d trade less, do less business and receive less investment. And the price would be paid by British families. Wages would be lower and prices would be higher.
“Leaving the EU would be the most extraordinary self-inflicted wound.”