On the economy if we leave the EU

A lot of claims have been made on both sides of the argument. They boil down to a hope that, if separated from the EU, the UK economy will boom. Or to a fear that the economy will suffer if it loses access to the Single Market. Individual businessmen have said how they think any change would affect their business. Most seem to believe leaving would be bad for their business.

The evidence we have is that the pound has fallen on two occasions recently. The first was when the date of the referendum was announced. The second was today when opinion polls showed a majority for leave. The most likely reason in each case is because the market fears uncertainty. Calling the referendum created uncertainty as to the outcome. This uncertainty can be resolved by a decision to remain. If the decision is to leave, the terms of the UK’s relationship, if any, with the EU would need to be negotiated. That would cause the uncertainty to last as long as the negotiations do.

A lower pound means prices go up. Those who do not have much money would have even less. They above all cannot afford a leave vote. The majority of businesses prefer to remain, precisely because they can continue trading as they do now. Leaving would mean no more investment until the relationship with Europe becomes clear, which could take years.

The head of the NHS in England has said that a weaker economy would mean less money for the NHS. The leave campaign is ignoring the economic consequences of leaving the EU. It is behaving like a political party in offering a manifesto for what it would do after a leave vote. But if it spends the money currently going to Brussels on putting right our NHS, it cannot spend the same money on our farmers and scientists. It has no credible way of replacing what the EU spends in the UK, when the UK economy is suffering from prolonged uncertainty.

A referendum has to take a decision. The UK will remain in the EU or not. No referendum can elect a government. The UK has just elected a government, and there is no sign that most MPs are looking to elect another. How the present government would respond to a decision to leave is unclear, but more austerity is likely. If it does have to negotiate leaving the EU, it would have the option of using the money currently sent to Brussels to reduce the deficit. It would be entirely consistent with George Osborne’s track record as Chancellor for him to do just that.

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