Brexit would mean ‘years of austerity and wipe £40m from UK public purse’

David Cameron

David Cameron

The Institute for Fiscal Studies claims quitting the EU would cause the Treasury to cut billions of pounds from British public services and welfare

Brexit would lead to more years of austerity and tax hikes – and wipe £40billion from UK public coffers.

In a report setting out the stark consequences of Brexit , the IFS says leaving would see growth fall by between 2.1% and 3.5%.

This would cost the country between £20billion and £40billion in 2019/20 – even after the UK’s contribution to Brussels has been taken into account.

The report says: “A vote to leave would increase uncertainty in the short run and make trade more expensive in the long run. It would make the UK less attractive for foreign investment.”

The independent think-tank also criticises the claim by the Leave campaign that Britain would save £350million a week in EU contributions.

It says this figure is “wrong” and takes no account of the rebate or the money we receive in subsidies and regional funding.

The UK’s net contribution to the EU is £8billion a year or £150million a week.

The IFS said if Britain were to negotiate a deal with the EU similar to Norway’s, we would still have to pay at least £4billion and abide by EU rules.

And even if we paid less, it warns that to balance the books in 2020 would require “an additional £5billion of cuts to public service spending, an additional £5billion of cuts to social security spending and a tax rise of £5billion”.

Former Labour Chancellor of the Exchequer Alistair Darling said: “The economic case is now closed. The IFS has made clear that leaving Europe would decimate our public services through spending cuts – and heap tax rises on working families.”

Meanwhile, David Cameron yesterday hit out at claims Tory opponents will try to topple him after the June 23 referendum.

The PM said: “I said we will have a renegotiation of Britain’s terms of membership of the EU and we will then hold a referendum. I am doing what I said I would do.”