A UK exit from the European Union would result in a “serious economic shock”, which could cost a million jobs and £100 million, according to a report from the CBI.
The study, carried out by PwC for the business organisation, which in total speaks for 190,000 businesses, found that a vote to leave in the upcoming referendum would cause negative shockwaves within the economy that would last a number of years, and cost the UK economy 5% of GDP and 950,000 jobs by 2020.
The study looked at the two possible most likely scenarios should Britain choose to leave, one where the UK manages to negotiate a free trade agreement (FTA) with the EU, and one where it does not and instead needs to rely on World Trade Organisation rules while renegotiating treaties that could take a decade or more to get back to similar terms as the treaties the UK currently enjoys. Both possibilities would leave the UK in a worse position economically that staying within the EU.
Carolyn Fairbairn, CBI Director-General, commented:
“This analysis shows very clearly why leaving the European Union would be a real blow for living standards, jobs and growth.
“The savings from reduced EU budget contributions and regulation are greatly outweighed by the negative impact on trade and investment. Even in the best case this would cause a serious shock to the UK economy.
“By 2020, the overall cost to the economy could be as much as £100 billion and 950,000 jobs. Household income in 2020 could be up to £3700 lower than it would otherwise have been. The economy would slowly recover over time, but never quite tracks back to where it would have been. Leaving the EU would mean a smaller economy in 2030.”
Previously, the CBI said it would not align itself with either side of the EU referendum campaign, but a recent poll found that 80% of members questioned in a survey wanted to remain in the EU.