Britain is much stronger as a part of Europe, and Europe is much stronger with Britain as a driving force, and there is no upside for Britain in Brexit, OECD Secretary-General Angel Gurria said here Wednesday.
He released the OECD report titled “To Brexit Or Not To Brexit: A Taxing Decision”, which finds Britons will be paying a heavy “Brexit tax” for many years if Britain leaves the European Union (EU).
Gurria said: “Only costs that can be avoided and advantages to be seized by remaining in Europe. No one should have to pay the Brexit tax.”
He cited that since Britain joined the EU in 1973, its GDP per capita has doubled, saying “This is not only more than in the other major EU member states, but also more than in English-speaking countries that are not EU members.”
He emphasized the near-term effects and long-term effects of Brexit, including a sell-off of assets, a sharp rise in risk premia, confidence falling, investment inflows waning, thus holding back growth.
The Secretary-General said: “Less investment, reduced flows of goods and people, costlier credit and lower exposure to ideas and skills across borders would ultimately undermine productivity and the long-run economic capacity of the UK economy.”
“Leaving Europe would impose a Brexit tax on generations to come. Instead of funding public services, this tax would be a pure deadweight loss, with no economic benefit,” he noted.
A decision by Britain to leave the EU would cause a severe negative shock to the economy and weaken GDP growth for many years.
By 2020, British GDP would be over 3 percent smaller than otherwise (with continued EU membership), equivalent to a cost per household of 2,200 pounds (about 3,190 U.S. dollars) (in today’s prices), according to the new OECD study.
By 2030, in a central scenario GDP would be over 5 percent lower than otherwise — with the cost of Brexit equivalent to 3,200 pounds per household (in today’s prices), added the study.
The OECD’s analysis echoed the report of the HM Treasury, which has estimated that GDP would be 6 percent lower by 2030 and that this could leave households 4,300 pounds worse off.
Analysts recently suggested the uncertainty of the EU referendum has affected the British economy. The Office for National Statistics announced Wednesday the lowest quarterly GDP growth figures since 2012.
Britain will hold a referendum on June 23 to decide whether it should remain in the EU. (1 pound = 1.45 U.S. dollars)