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Economic Reality Check for leave campaigners

Today sees six important economic warnings which are an economic reality check about the devastating impact of the UK leaving Europe.

The real world and experts are making one thing clear today: the UK economy is stronger in Europe and leaving is a very real risk.

This is in stark contrast to the fantasy offered by the leave campaign, who have no plan for the UK economy outside Europe.
 
In an unprecedented collection of serious warnings, today we see: 

  1. The Chairman of Hitachi, which directly employs 3,600 people in the UK, saying that investment and jobs would be lost if Britain leaves the EU single market: “This is the cold economic reality of Brexit"
  2. The current and former heads of the WTO saying that leaving would damage the UK economy and the UK would not get the free trade deal the Leave campaign claims: it is “a high-risk bet”
  3. Reports that Sterling is falling at the prospect of a leave vote, which would hit consumers through price rises
  4. Janet Yellen, Chair of the US Federal Reserve, has said that "A UK vote to exit the European Union could have significant economic repercussions"
  5. The current and former Business Secretaries, with the head of the CBI, warn that leaving would hit UK exporters, with new research from Stronger In showing the ‘export tax’ on UK businesses would rise by £34bn
  6. The Institute for Fiscal Studies slams Michael Gove and say that leaving would mean “spending less on public services, or taxing more, or borrowing more” 
Background
 
Hitachi: reality check on jobs and investment 
  • The Chairman of Hitachi, Hiroaki Nakanishi, has issued the strongest warning yet from a major international employer that leaving the EU would mean job losses in the UK. He says:
“We worry because those advocating Brexit have no answer to how the UK could negotiate cost-free access to this huge market from a position outside it.
“It would take a long time and result in uncertain market conditions; during this renegotiation period, investors would probably be waiting to see the outcomes, hold back on investment, and jobs would be lost.
“This is the cold economic reality of Brexit.”
Mirror, 7 June 2016, link

World Trade Organisation: reality check on trade

  • The current Director General of the World Trade Organisation has said that negotiating a new deal could take “decades” and “would be a high-risk bet”:
“It could be a few years, it could be decades. But our experience suggests that to expect smooth sailing and quick results would be a high-risk bet”
The Times, 7 June 2016, link 
  • The former Director General of the World Trade Organisation has said leaving would damage the UK economy and would be “shooting in one’s foot”: 
“Trade negotiations are not about love, they are about hard numbers, they are about clout, they are about bargaining capacity. Standing alone, the UK loses the bargaining capacity it has with other countries because it belonged to the European Union and because the European Union is 500 million consumers. Like by the way, that is the reason the US, Canada and Mexico have a free-trade agreement. Trade is a world of elephants. 500 million. China, India, more than 1 billion. That is what trade is about, that is what trade negotiations are about. So, look at the UK, outside in the cold? Okay. More imports, less exports. That is roughly what I call shooting in one’s foot.”
BBC Newsnight, 6 June 2016

Sterling: reality check on the Pound

  • The Pound has hit peaks of volatility not seen since height of financial crisis as polls indicated that a leave vote was a realistic prospect, indicating the economic turmoil that would occur if Britain leaves the EU.
BBC News, 7 June 2016, link
 
Business secretaries and the CBI: reality check on exports
  • Former Business Secretary, Peter Mandelson, and current Business Secretary, Sajid Javid, will warn at a press conference in Central London at 10am today that if Britain leaves Europe our businesses will face trade barriers. In a joint letter to the Vote Leave campaign they write: “A campaign to leave the EU’s single market without a plan for an alternative is an act of economic sabotage which would risk thousands of jobs, billions of trade and investment and the future economic stability of our country.”
  • They will be joined by the head of the CBI, Carolyn Fairbairn, to say that Britain’s economy is stronger within the EU’s single market.
  • New analysis from Stronger In today shows UK exporters face £34.4bn ‘Export Tax’ from cost of non-tariff barriers alone if Britain leaves the EU’s Single Market, which is an average £79,500 hit for each of the 430,000 British businesses that export to the EU.

US Federal Reserve: reality check on global financial stability

  • Janet Yellen, Chair of the US Federal Reserve, has said that "A UK vote to exit the European Union could have significant economic repercussions."
BBC News, 6 June 2016, link
 
IFS slam Michael Gove and say that leaving would mean “spending less on public services, or taxing more, or borrowing more”
  • The IFS have slammed Michael Gove for false claims and outlined the disastrous consequences of leaving for the UK public finances: “Michael Gove claimed on Friday that the IFS had said that leaving the EU would free up £8 billion to spend on the NHS. We have not said that…There is virtual unanimity among economic forecasters that the negative economic effect of leaving the EU would be greater than that. That is why we conclude that leaving the EU would not, as Michael Gove claims we said, leave more money to spend on the NHS. Rather it would leave us spending less on public services, or taxing more, or borrowing more.”

IFS, 6 June 2016, link