How will Brexit affect the economy and house prices?
George Osborne hopes voters will be taken in by his Project Fear predictions
GEORGE Osborne has been peddling doom and gloom with his predictions for what will happen if Britain votes to leave the European Union.
With his Project Fear mantra he claims the outlook for the British economy will be very bleak after Brexit.
He says chaos and uncertainty could send the pound plummeting by 15% and government borrowing up by £39bn.
And he has said families would be £4,300 a year worse off with Brexit.
The Treasury’s short term impact report predicts 820,000 jobs will be lost and the average wage will sink by 4%, or between £800 and £1,400 a year.
And the document suggests a vote for Brexit will wipe 6% off GDP and tip the UK into a year-long recession.
But his nightmare scenario has been blasted by Brexiteers and questioned by the cross-party House of Commons Treasury Select Committee.
The Treasury report says people would lose money with Brexit but economist Gerard Lyons says not even their own figures showed that.
It expects the economy to be much bigger by 2030 than it is now, no matter how Britain votes in the EU referendum.
But instead of reporting it this way the Treasury said the economy would be 6.2 per cent smaller with Brexit than if we remained in.
Even so, Dr Lyons said that would still leave the UK economy almost 30 per cent larger with Brexit by 2030 than it is now.
And the member of Economists for Brexit said the Government’s financial predictions are based on pessimistic assumptions about future policy including if we were to leave the EU we would not change our migration or regulation policy.
Dr Lyons also said the Treasury has miscalculated the figure, and the Chancellor’s £4,300 loss per household should be reported as a long-term gain for each of us.
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How will Brexit affect house prices?
George Osborne has warned house prices may fall by 18% if Britain votes for Brexit
He said it would be a lose-lose situation because despite homes being cheaper he claims it would be more difficult for first time buyers to get mortgages.
And he says mortgage rates would go up.
But Brexit-backing Cabinet minister Chris Grayling says voting to stay in the EU would make it difficult for people to get on the housing ladder – and even to be able to afford to rent a home.
He says it is simple maths because if we cannot set limits on the numbers of people coming to Britain then it will make it more difficult for people to afford their own home.
The Leader of the House of Commons says the more people trying to find homes, the more expensive they will be.
And Lord Andrew Green, the chairman of Migration Watch UK, says at the present rate of immigration we have to build one home every four minutes to house migrants and their families.
He says a vote to Remain will mean our ongoing housing crisis will only get worse.
How would Brexit affect trade?
Remain campaigners say if Britain leaves the European Union then EU states would slap tariffs on us.
And David Cameron says he was absolutely convinced the UK economy would suffer if we did vote to leave.
But the Prime Minister has admitted that the EU’s share of global trade has fallen since Britain signed up for the Common Market in the early 1970s.
If Britain was outside the European Union it would be free to negotiate trade deals with countries around the world – as well as the EU.
Mr Cameron admits the UK desperately needs a trade deal with India, as we currently export more ‘services’ to tiny Luxembourg than one of the fastest growing economies in the entire world.
Brexit-backers say Britain would thrive if it was allowed to negotiate trade deals outside of Brussels.
Tory MEP and Out campaigner Dan Hannan says it is scaremongering of the Remain campaign to suggest EU states would impose tariffs on Britain.
At the minute Britain is a great customer, buying £291billion of EU goods each year, more than the £240billion we sell to other EU states.
Leave campaigners say the EU would not want to jeopardise this trade by bringing in tariffs.
How will Brexit affect the Single Market?
The Treasury dossier mapped up two different Brexit scenarios – ‘Shock’ and ‘Severe Shock’ – depending on whether Britain could cut a new trade deal with the EU within the mandated two year deadline.
Mr Osborne is hoping Britain votes to stay in the EU so businesses can keep trading in the single market – and says this is the best way to keep the economy stable.
This means countries can trade with each other without restrictions or tariffs.
If Britain does vote to leave the EU then a trade deal would need to be thrashed out so we can keep exporting our goods to Europe, and they can sell goods back to us.
But Brexiteer Boris Johnson says there is no need to be in the single market to export to it.
Since the start of the single market in 1993 he says 36 countries – including the USA, India, New Zealand, Canada, and Brazil – have done better at exporting to the EU single market without being in it.
And if Britain does leave the EU then it would be able to negotiate trade deals not just with the EU but countries all over the world.
Among the business people who back Boris’s view are two of Britain’s biggest names – the man who reinvented everyday devices such as vacuum cleaners and hand dryers Sir James Dyson, and Lord Anthony Bamford from JCB.
Lord Bamford says there is ‘little to fear’ by quitting the EU and Sir James says the bloc is dominated by Germany and does not want to champion new technologies.