U.K. Government Says Exit From EU Will Cause Economy to Shrink

LONDON—Britain would be permanently poorer if it left the European Union, according to a U.K. government's long-term assessment of the economic costs of a British exit from the bloc, due to be published later Monday.

George Osborne, Treasury chief, told the British Broadcast Corp. on Monday that leaving the EU would cost households £ 4,300 ($6106.9) a year.

"That's a fact everyone should think about as they consider how to vote," said Mr. Osborne, British Prime Minister David Cameron's closest political ally. "As chancellor, I'm clear, we're stronger, safer and better off in the European Union."

The government report is also due to say an exit from the bloc would cause Britain's economy to shrink by 6% by 2030.

The cost-benefit analysis comes as the U.K. is gearing up to vote in a June 23 referendum on whether to stay in the bloc or leave. Mr. Cameron, who is spearheading efforts to persuade Britons to vote to remain in the EU, has made economic security central to his arguments. He says access to the EU's single market of 500 million consumers is crucial for the economy's health and that if Britain left the bloc continued access would come at a price, including contributing to the EU's budgets and being bound by its rules without having a say over them.

But those who want the U.K. to leave the EU, including London Mayor Boris Johnson and other lawmakers in Mr. Cameron's Conservative Party, accuse Mr. Cameron's team of scaremongering. They say the U.K. would thrive economically outside of the EU because it would continue to be able to trade with Europe while also being freer to negotiate trade deals with faster-growing economies and less restricted by regulatory burdens imposed by Brussels. A spokesman for Vote Leave, which is campaigning for Britain's exit from the bloc, said exposure to the eurozone has damaged the British economy and will create future problems. "It is safer to take back control."

The document, expected to be published later Monday, will set out the likely impact of credible alternative models to Britain's membership in the EU. Estimates of the economic impact of a British exit from the EU vary wildly, largely because of uncertainty about how the U.K.'s eventual trade relationships would look—both with the EU and with the other trading partners Britain would need to negotiate bilateral deals with if it no longer has access via EU-secured deals.

How people view the effect of the EU on the U.K. economy will be the most significant determinant of how they vote, said Joe Twyman, head of political research at pollster YouGov PLC. "It will be hugely important," he said.

Write to Jenny Gross at [e-mail]

(END) Dow Jones Newswires

April 18, 2016 05:05 ET (09:05 GMT)

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