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Treasury 'grossly exaggerated economic impact of quitting EU'

Published 13/06/2016

Critics said the Chancellor and other senior figures were treating voters like children
Critics said the Chancellor and other senior figures were treating voters like children

Treasury analysis has "grossly exaggerated" the impact quitting the European Union would have on the nation's finances, according to an academic review.

Most economic modelling has found that Brexit would make little difference to Britain's economy, the study published by the Cass Business School claimed.

But the Government has ignored the waves of research, instead publishing "highly prejudiced" reports warning the UK would be poorer by £4,300 per household by 2030 and be hit by an immediate recession, author David Blake said.

The City University London professor accused the Treasury of becoming a "propaganda machine" for Brussels.

His report on the "extraordinary abuse of economic models" found the system used by the Treasury would generate predictions that the UK would be better off signing up to the euro and every country in the world would benefit from joining the EU.

Prime Minister David Cameron and Chancellor George Osborne " have used the reports to ramp up the scaremongering", he claimed.

" There is doom-mongering on every page of the two reports," Prof Blake said. "It's no different from the way children are frightened into doing what their parents want. We are all being treated like children."

He added: " The British Treasury has in effect become a propaganda machine for a political institution led by (European Commission president) Jean-Claude Juncker - a man who has declared his hostility to 'democratic choice' when it comes to the wishes of the European people. This whole exercise is utterly dangerous for democracy."

The Treasury's research assumes the UK would be unable to negotiate more favourable trading arrangements than it has now with either the EU or the rest of the world, according to the academic.

Using economic models that focused on international rather than European trade "it might well have found that the UK would be better off leaving the EU", he said.

Change inevitably means some people will gain while others lose out, but by "focusing only on economic issues, the Treasury's two reports present a highly prejudiced case for remaining in the EU", Prof Blake said.

" Most of the other economic models that have examined the economic consequences of Brexit - and which have been entirely ignored by the Treasury - find that it will make little difference to the UK's economy whether the UK stays in or leaves the EU," he added.

"This is consistent both with Greenland's experience of leaving the EU in 1985 and with Ireland's experience of ending currency union with the UK in 1979 - neither of which is considered in the Treasury reports."

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