Brexit would cause 'significant shock to UK economy', says thinktank

Posted On: 
10th May 2016

A vote to leave the European Union would lead to lower wages, higher prices and slower economic growth, according to a thinktank.

Brexit will be bad for the economy, claims a think tank
Credit: 
PA Images

The National Institute of Economic and Social Research also warned that the pound would slump in value and be worth nearly the same as the euro in the event of Brexit.

Its report, published today, also predicted that British people would be spending up to £2,000-per-head less by 2030 outside the EU, while interest rates would also rise.

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However, pro-Brexit campaigners pointed out the NIESR previously called for Britain to rejoin the failed Exchange Rate Mechanism and sign up to the European single currency.

In their report, the thinktank said: "A decision to leave the EU would represent a significant shock to the UK economy."

Britain's long-term GDP would be between 1.5% and 7.8% lower than expected in the event of Brexit, according to the NIESR.

The value of sterling would plummet by 20%, pushing up inflation, while real terms wages would fall by between 2.2% and 7%, they said.

But Matthew Elliott, head of the Vote Leave campaign, rejected the forecasts.

He said: "The NIESR said we would have to rejoin the ERM and then claimed we would benefit if we scrapped the pound. Both of those recommendations would have resulted in disaster. They were wrong then and they are wrong now. 

"If we Vote Leave on 23 June, we take back control over our economy, trade and the £350 million we send to Brussels each week. This will be good for jobs, growth and investment."