The British government has unveiled a 200-page analysis of what the impact would be of Britain voting to leave the EU (#Brexit) in June’s referendum. The government wants Britain to stay in the EU and is making the potential economic fallout the focus of its campaign.
If Britain were to leave, it would make the British economy less open, and this would have a negative effect on factors such as productivity, trade, and inward investment, according to the government’s analysis.
The document presents three different Brexit scenarios. Under all three, Britain would be poorer. For example, the analysis estimates that the UK would be between 4.6% and 7.8% of GDP better off inside the EU – that's equivalent to £4,300 worse off per household. But this household figure is controversial because GDP and household income are two very different things. GDP per household is much higher than household income, so any loss on families’ income would probably be smaller than the government has hinted.
We spoke to BuzzFeed's Europe editor about the document and what could happen if Britain votes to leave the EU.
What exactly is Brexit?
On 23 June Britain will hold a referendum to decide whether to remain in or leave the European Union. If Leave wins, then the UK will exit the EU. But this won't be immediate – the government would probably want to negotiate a new relationship with the EU before formally leaving, a process likely to take a few years.
Why is it happening now?
In 2013, under pressure from Conservative backbenchers and the increasing popularity of anti-EU party UKIP, prime minister David Cameron pledged to hold a referendum by 2017 if the Conservatives won a majority at the general election. Last May, his party won a small majority and the prime minister stuck to his promise.
In the event of Brexit, how will it impact the UK economy?
It's complicated. Most analysts agree that in the short term the UK economy would take a hit due to the uncertainty that a Leave vote would generate. However, in the longer term it's difficult to predict what would happen as a lot will depend on what takes place in the wider global economy. Nevertheless, most research published to date suggests that Britain would be worse off outside the EU compared with remaining a member of the union. But all such analysis depends on the assumptions that one makes about what they think might happen in the broader economy, around factors such as immigration levels, the eurozone countries, and developments in emerging economies. It's also important to note that the analysis published this week doesn't say that the UK economy would contract if Britain votes to leave the EU; at its simplest level, it suggests that the UK would grow slower outside the EU than if the country chose to remain in the EU.