Leaving the EU would throw Britain into a year-long “DIY recession”, says George Osborne

Leaving the EU would throw Britain into a year-long “DIY recession”, according to a Treasury paper unveiled by David Cameron and George Osborne today.

However Vote Leave dismissed the Chancellor’s warning as “deeply biased”.

The Treasury’s short-term analysis of the risks of Brexit claims that Britain’s GDP would be between 3.6 per cent and six per cent lower after two years than current forecasts.

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Britain becoming less open to trade and investment from overseas, uncertainty caused by the Leave vote, and volatility in the financial markets are cited as the causes behind the drop.

House prices are also scheduled to fall between 10 per cent and 18 per cent and there would be a “sharp rise” in inflation, the research claims.

The discrepancy in forecasts is explained by the Treasury as the difference between the “shock scenario”, which would see the UK negotiate a bilateral trade deal with the EU, and the “severe shock scenario”, which assumes no such agreement.

Osborne will say there was a “brighter future on offer” for Britain inside the European Union. 

“It’s only been eight years since Britain entered the deepest recession our country has seen since the Second World War,” he will say.

“Every part of our country suffered. The British people have worked so hard to get our country back on track. Do we want to throw it all away?

“With exactly one month to go to the referendum, the British people must ask themselves this question: can we knowingly vote for a recession? Does Britain really want this DIY recession? Because that’s what the evidence shows we’ll get if we vote to leave the EU.”

Campaigners pushing for a Leave vote have seized on the latest warnings as further evidence of the Remain camp’s ‘Project Fear’ narrative.

Former Cabinet minister Iain Duncan Smith said the Treasury had “consistently got its predictions wrong in the past” and pointed out responsibility for forecasting was removed from the department in 2010.

“This Treasury document is not an honest assessment but a deeply biased view of the future and it should not be believed by anyone,” the Conservative MP said.

“It is a fact that we hand over £350m a week to the EU. If we Vote Leave we can take back control of that money and use it to help people here in Britain.

“We will also take back control over our economy creating hundreds of thousands of new jobs as we do trade deals with growing countries in the rest of the world.”