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Think tank behind Brexit alert denies giving EU propaganda

By David Hughes and Ben Wood

Published 26/05/2016

The Institute for Fiscal Studies said Britain could face two more years of austerity if there is a Leave victory in the June 23 referendum
The Institute for Fiscal Studies said Britain could face two more years of austerity if there is a Leave victory in the June 23 referendum

A respected economic think-tank has rejected claims it is acting as the EU's "propaganda arm" by issuing a stark warning about the potential impact of Brexit.

The Institute for Fiscal Studies said Britain could face two more years of austerity if there is a Leave victory in the June 23 referendum.

Researchers warned that the UK Government may extend its austerity drive after a Brexit vote as it grapples with a fall in national income and a sharp rise in public sector borrowing.

The IFS report said a vote to Leave could see public finances take a £20bn to £40bn hit in 2019/20, if gross domestic product is 2.1% to 3.5% lower over the period, as predicted by the National Institute of Economic and Social Research (NIESR).

Paul Johnson, IFS director and an author of the report, said: "Getting to budget balance from there, as the Government desires, would require an additional year or two of austerity at current rates of spending cuts."

The IFS said Britain could use its contribution to the EU - estimated at £8bn a year - to help shore up its finances if it voted for Brexit. But it said this could be overshadowed by the negative impact on the UK economy, with a 0.6% fall in national income offsetting the benefits.

It also dismissed claims from the Leave camp that the UK would have an extra £350m a week to spend if it headed for the European exit door, while the saving from leaving the EU would be halved if it followed Norway and joined the European Economic Area.

Vote Leave dismissed the IFS as a "paid-up propaganda arm of the European Commission" which could suffer a financial hit from Brexit because it benefits from EU funds.

"The IFS is not a neutral organisation. It would face an £800,000 deficit if we vote Leave," the campaign said.

In 2014, 11% of the think-tank's research funding came from the EU and it has received more than €7.4m (£5.6m) from European Commission sources since 2009, Vote Leave said. Mr Johnson told BBC Radio 4's Today programme that the think-tank received European funding for some of its "academic work".

Belfast Telegraph

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