Britain would be less well off after Brexit

The OECD on Wednesday became the latest international organisation to urge Britain to stay in the European Union, warning Britons would be worse off if they voted to leave in the June referendum.

“In some respects, Brexit would be akin to a tax on GDP, imposing a persistent and rising cost on the economy that would not be incurred if the UK remained in the EU,” the Organization for Economic Cooperation and Development said.

In a new report, the inter-governmental organisation warned that British gross domestic product (GDP) would be 3.3 percentage points smaller by 2020 if Britain left the EU than if it stayed, and 5.1 percentage points smaller by 2030.

It cited the impact of economic uncertainty, higher trade tariffs, a reduction in economic migration and the impact on sterling as the main risks in the near term.

In real terms, this relative loss of GDP would see household income reduced by £2,200 (2,800 euros, $3,200) in the next four years and £3,200 by 2030 — and up to £5,000 in the most pessimistic case compared to what it would be if Britain stayed.

“The best outcome under Brexit is still worse than remaining an EU member, while the worst outcomes are very bad indeed. The Brexit tax just gets bigger,” said OECD secretary-general Angel Gurria.

“We see no economic upside for the UK whatsoever.

“The bigger question is, why spend so much wealth, well-being, time, energy and talent in order to compensate the damage of a bad decision when you can simply avoid taking such decisions.”

The analysis reflects that made by Britain’s finance ministry, and follows warnings of the economic damage of a Brexit by International Monetary Fund and the G20.

However, campaigners for Britain to leave the EU dismissed the study, accusing the OECD of protecting its own interests.

“Jose Angel Gurria is part of a global bureaucracy that feathers its nest with vast expenses claims paid for by taxpayers,” said Robert Oxley, a spokesman for the Vote Leave campaign.

He said the OECD had recommended Britain join the euro, “so why should we listen to their doom-laden predictions about leaving the EU?”

– Impacting economic growth –
Opinion polls show Britons are divided on the issue, although the “Remain” camp has a slight lead, and experts warn the uncertainty is already impacting economic growth.

New figures published Wednesday showed GDP grew by 0.4 percent between January and March, down from 0.6 percent in the fourth quarter of last year.

“UK continues to grow but OECD warns today that threat of a vote to Leave the EU is weighing on economy,” Finance Minister George Osborne said on Twitter.

Osborne, who with Prime Minister David Cameron backs the campaign to stay in the EU, warned last week that Britain would be “permanently poorer” if it left as he published a detailed Treasury analysis of the risks of a Brexit.

However, the “Leave” campaign dismissed that report as “flimsy”, and repeated their arguments that Britain could forge a successful future outside the bloc.

The OECD report said a British free trade agreement with the EU would partially offset the loss of access to the single market by 2023, but said the costs would be higher.

It warned that bilateral UK-EU trade would contract, and Britain would face additional barriers on third-country markets, to which it currently has preferential access.

US President Barack Obama warned last week that Britain would be at the “back of the queue” for a trade deal with the United States if it left the EU.