In an analysis paper the Treasury said the shock of leaving the EU would put the UK in recession and in the worst-case scenario lead to 820,000 jobs being lost and GDP being 6% lower in two years.
A Brexit vote would cause house prices to crash by between 10 and 18% in two years, the Treasury has warned.
In an analysis paper the Treasury said the shock of leaving the EU would put the UK in recession and in the worst-case scenario lead to 820,000 jobs being lost and GDP being 6% lower in two years.
With a joint article in The Telegraph, Prime Minister David Cameron and Chancellor George Osborne said: “This would be, for the first time in our history, a recession brought on ourselves: a DIY recession.
“As the Bank of England has said, as the IMF has underlined, and now as the Treasury has confirmed: the shock of walking out of Europe would tip the economy into reverse.”
The Treasury split its analysis into a ‘shock scenario’ and a worst-case ‘severe shock scenario’.
With the former ‘cautious’ prediction, which assumes that the UK will establish a bilateral trade agreement with the EU, the Treasury predicted house prices to fall by 10%, 520,000 jobs being lost and GDP being 3.6% lower.
The “severe shock” scenario, which included the 18% house price fall prediction, was based on what would happen if the UK left the EU's single market and defaulted to World Trade Organization membership.
In response Vote Leave’s Iain Duncan Smith accused the Treasury of having a “deeply biased view of the future”.
And Patrick Minford of the Economists for Brexit group told the BBC: “At the heart of the Treasury calculations lies a serious attempt to deceive the British people.
“The key to any calculation lies in the assumptions made: garbage in, garbage out.
“The Treasury has put garbage in for the long-term effects of Brexit. These in turn underpin its forecasts of short term recession."
