- The best outcome under Brexit is worse than remaining in EU
- U.K. GDP would be 5% lower by 2030 under Brexit scenario
The Organization for Economic Cooperation and Development became the latest international body to warn the U.K. that leaving the European Union would cause lasting damage to the economy, earning rebukes from campaigners for a so-called Brexit.
Britain would be hit by tighter financial conditions, weaker confidence, higher trade barriers and restrictions on labor mobility, according to an OECD report published Wednesday in London. By 2020, the OECD says gross domestic product would be more than 3 percent smaller than with continued EU membership, which it calculates is equivalent to a cost of 2,200 pounds ($3,200) per household. By 2030, GDP would be 5 percent lower, equivalent to 3,200 pounds.
“The best outcome under Brexit is still worse than remaining an EU member whilst the worst outcomes are very bad indeed,” OECD Secretary General Angel Gurria said in a speech in London. “Why would anyone want to give up this truly win-win proposal? The ‘Brexit tax’ would be a pure dead-weight loss, a cost incurred with no economic benefit. And this tax would not be a one-off levy. Britons would be paying it for many years.”
The OECD joins a chorus of warnings about the impact Brexit would have on both domestic and European growth. The Bank of England called it the biggest risk to domestic financial stability, with policy makers saying the June 23 referendum is already weighing on growth. The International Monetary Fund said this month that it was concerned about the “severe” damage a vote to leave could inflict, while the World Bank has cautioned that the global economy won’t cope well with the increased uncertainty surrounding the decision.
Vote Leave campaign spokesman Robert Oxley rejected the OECD’s “doom-laden predictions,” accusing it of being consistently wrong on the EU. U.K. Independence Party leader Nigel Farage described the institution on BBC Radio as being “stuffed with people who failed in politics.”
European Central Bank President Mario Draghi also chimed in on Brexit on Wednesday, in an interview with Bild published on Business Insider website.
“I cannot and do not wish to believe that the British would vote to leave, because we are stronger together,” he said. “But if they do, it should be clear: they would lose the benefits of the single market.”
The OECD’s report came amid signs the British economy is already losing momentum. It expanded 0.4 percent in the first quarter, matching the weakest pace of growth since the end of 2012, data showed. The OECD said leaving the EU would impose a “persistent and rising cost” to the economy.
“It’s good news that Britain continues to grow, but there are warnings today that the threat of leaving the EU is weighing on our economy,” Chancellor of the Exchequer George Osborne, who is campaigning to remain in the 28-nation bloc, said in a statement. “Investments and building are being delayed, and another group of international experts, the OECD, confirms British families would be worse off if we leave the EU.”