Business leaders raise million jobs threat over EU departure

The study also suggested that the UK economy could shrink by five per cent by 2020 if the June referendum produces a ‘leave’ vote.

PwC found that even if a trade agreement could be agreed quickly with the EU, GDP would be cut by three per cent.

The company said its forecasts were based on “moderate assumptions” and “significantly more pessimistic cases could be constructed”.

Andrew Sentence, PwC’s economic adviser and a former member of the Bank of England’s interest rate-setting monetary policy committee, said: “The three big impacts of leaving the EU we have been able to identify are increased uncertainty, a negative shock to trade and investment, and reduced labour supply through migration.

“While the potential to reduce the burden of regulation and lower fiscal contributions to the EU could be offsets, the net impact of the UK leaving the EU is still likely to be negative for GDP, employment and living standards, both in the short-term and the long-term.”

The research was commissioned by employers’ organisation the CBI which has declared support for Britain remaining in the EU.

Director general Carolyn Fairbairn said: “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 £3,700 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.

The study published today follows a survey of CBI members a week ago which found that four out of five wanted to remain in the EU, with just five per cent wanting to leave.

Former Prime Minister Sir John Major yesterday added his voice to those calling for a ‘remain’ vote in the referendum.

“I cannot believe that any sensible Briton wishes to divide Europe, and thus divide the West,” the Tory grandee said, as he branded attempts to tear up Britain’s existing bespoke deal as “perverse”.

Sir John accused some in the Leave camp of ignoring and even obscuring “facts” that did not sit well with their objective, including statements from European leaders that there will be no trade deals without free movement and an invoice for access to the single market.

Brexit campaigners have claimed that the remaining 27 EU members would be eager to arrange new trade deals with the UK in negotiations where Britain could have the upper hand.

Sir John wrote: “This is self-deception to the point of delusion. Their argument is that the EU needs the UK market more than we need theirs, on the basis that - overall - the EU exports more to the UK than we export to them.

“This is, at best, disingenuous. More bluntly, it is fantasy.”

He said that any trade from outside the EU would still be on Brussels’ terms.