With only a week to go, the EU referendum debate is ramping up across the country… but are we better in, or are we better out? The Think Bigger editorial team takes a closer look.
Bremain supporters are claiming that there isn’t a credible plan for Britain’s future outside the EU calling the bold move a “leap in the dark” that will put our economy at risk. Chancellor George Osbourne has taken the claim one step further, announcing the leap will leave Britain in “profound economic shock that would hit the economy and could tip Britain back into recession”.
On the contrary, Brexit supporter group, Economists for Brexit, say an exit from the EU will boost UK gross domestic product in the long term, increasing by a cumulative 4 per cent by 2020.
So, what type of information should we be looking at when making our decision on 23 June?
The big T for Tax
George Osbourne warns on public spending cuts and increase in taxes, as a short term solution to fill a £30bn “black hole”, that could be left should the UK vote to leave the European Union. Osbourne believes the tax increase will contribute £15bn towards plugging the black hole created by the Brexit. However with such restrictions in place, leave backers are claiming the “punishment budget” will force the economy into recession, leaving UK businesses on rocky ground in the short term. But is the new budget just a scare tactic? According to Sky News, 57 Tory MPs have signed a letter saying they would vote down any such post-referendum budget…
Cost of UK-EU trade
CBI claims a leave vote will “put British businesses out in the cold”, with business groups from Switzerland, Norway, Albania and Canada agreeing that full access to the EU as a single market is in the best interests of the UK. However, if the UK leaves the EU, there becomes an opportunity for the UK Government to control its own trade policy. This could allow the UK government to negotiate a UK-EU free trade deal, which Brexit plan to be implemented by as early as May 2020. Of course this trade free deal is quite an optimistic outlook from Brexit backers, as confirmed by the CEP, which agreed that whether or not a UK-EU trade free deal is created, a Brexit scenario will still impose costs on UK businesses in the short term.
Future growth predictions
There’s a mountain of evidence which shows how the EU has created trade opportunities for the UK, as opposed to diverting it, so it’s safe to say that EU membership has served Britain well. Economists are predicting that should the UK remain, we will continue to reap the benefits of EU membership. However, should we leave, Britain’s economy could lose out in eight out of nine situations, stretching from 0.1% to 3.9% in GDP loss by 2030. Overall, such predictions conclude that by 2030, Britain would be poorer than it otherwise would be. Economists for Brexit confirm that an exit vote will depress economic activity in the short term, but in the longer term, Britain has opportunities to grow by a cumulative 4 per cent by 2020. All in all, the economic assessment is one based on uncertainty, however all have agreed that in the case of Brexit, there will be a short term blow to the economy.
As Brexit worries rise, SMEs are building up their cash reserves, for use as a “buffer”, and FTSE100 shares have hit a three month low. So what will it be for you, in or out?
— Think Big Grow Fast (@Think_Bigger_) June 16, 2016