The U.K. government has a message for British citizens: If you vote to leave the European Union, you should expect economic growth to evaporate.
An analysis published by the U.K. Treasury on Monday predicts up to 820,000 job losses and a year-long recession if Britain quits the world’s biggest single market. That’s an even gloomier forecast than the Bank of England’s warning earlier this month.
“With exactly one month to go to the referendum, the British people must ask themselves this question: can we knowingly vote for a recession?” said Chancellor George Osborne. “Does Britain really want this DIY recession?”
The government’s analysis of the impact of a vote to exit the EU — the Brexit scenario — imagines two economic “shocks” of varying severity.
The first scenario, which the government describes as “cautious,” assumes that Britain will be able to negotiate a bilateral trade agreement with the EU. A sharp rise in inflation and a 10% hit to housing price values would still result. After two years, gross domestic product would be 3.6% lower than current forecasts. The government says 520,000 jobs would disappear.
In the second, more severe scenario, the U.K.’s trading relationship with the EU defaults to the rules of the World Trade Organization, a status shared with countries like Russia and Brazil. If that happens, the government predicts an 18% hit to house prices and a 6% whack to GDP.
Under this scenario, the budget deficit would spike and up to 820,000 jobs would be lost.
In a separate analysis released in April, officials warned that a worst-case scenario would leave the U.K. economy about 7.5% smaller after 15 years than it would have been. That translates to 2,100 pounds ($2,982) per person in terms of annual GDP, and 45 billion ($64 billion) in lost tax revenue.
Representatives for the official campaign to leave the EU did not immediately respond to a request for comment. In the past, they have described the government’s economic forecasts as “deeply flawed.”
But even Boris Johnson, the former London mayor who is leading the leave campaign, has said that a vote to quit the EU in June could initially cost Britain jobs.
— Ivana Kottasova contributed reporting.