Osborne warns of Brexit tax toll as ‘leave’ gains in polls
Reduced trade and investment would leave a 30 billion pound (US$42 billion) “black hole” that would have to be plugged by increased taxes and cuts to spending on health, education and defence, Osborne will say in a speech today. He’ll share the platform with Alistair Darling, his predecessor from the opposition Labour Party, who’s also urging Britons to vote “Remain” in the June 23 referendum.
The joint appearance by two political adversaries is a sign of how rattled the anti-Brexit campaign has become, after a slew of opinion polls showed a lead for those wanting to leave the EU. Markets are showing signs of alarm too. The pound has slid 2.9 per cent in a week and the S&P 500 Index fell for a fourth day yesterday. The MSCI Asia Pacific Index advanced about 0.2 per cent today after shedding more than 4 per cent in the previous four sessions.
The latest survey, published yesterday evening, contained slightly better news for Osborne and his boss, Prime Minister David Cameron. But the ComRes phone poll for the Sun newspaper still showed momentum is on the other side. It found 46 per cent backing “Remain” and 45 per cent per cent for “Leave,” narrowing a gap that had been 11 points a month earlier. Nine per cent said they were undecided. Before that, five polls in two days had shown Leave ahead, by between 1 and 7 points.
‘Billions less’
As he seeks to reverse the tide, Osborne will slam a key financial argument often made by his opponents.
“Far from freeing up money to spend on public services as the Leave campaign would like you to believe, quitting the EU would mean less money, billions less,” the chancellor will say, according to speech extracts released by his office. That would mean “an emergency budget where we would have to increase taxes and cut spending.”
He’ll also point to signs of growing anxiety in the business world. France’s largest insurer warned yesterday that there’s an “extremely high” probability of a Brexit. Investors would then face “a true landscape of uncertainties,” because no one’s prepared for the negotiations that would follow a vote to leave, Axa SA Chief Executive Officer Henri de Castries said at a conference in Paris.
South Korean finance and central bank officials planned to meet tomorrow on the impact of the UK vote and Federal Reserve decisions. Australian Prime Minister Malcolm Turnbull told reporters in Perth today that investors were uncertain because it was “possible Britain will vote to leave the EU.”
The S&P’s Brexit-driven losing streak is the longest since February, while Germany’s 10-year bond yields have dropped below zero for the first time amid demand for safe havens. Japan’s benchmark government bonds were also at record lows today, while the yen hovered near a 19-month high. Gold held near its highest level in more than five weeks.
Already happening
“Look at what’s happening on financial markets,” Osborne will say. “The economic uncertainty the Leave campaign blithely insists won’t be caused by a vote to Leave is already being seen.”
“Leave” campaigners from Cameron’s Conservative Party rejected Osborne’s threat of further austerity.
“I am shocked that the chancellor is threatening to break so many key manifesto pledges on which all Conservative MPs were elected,” Tory lawmaker Steve Baker said in an e-mail. He said he’d oppose any bid to cut health spending or “increase taxes on hardworking families,” and reiterated the Leave campaign’s promise that more cash would be available for public services outside the EU.
Osborne’s threat of spending reductions echoes a central theme of campaigning by the opposition Labour Party, which has warned that cuts led by a Tory administration after Brexit would fall on the poorest and most vulnerable. Leaving the bloc would also lead the erosion of workers rights guaranteed by EU membership, the party has warned.
‘Significant move’
“We believe in standing up for working people whose jobs and communities depend on trade with Europe,” Labour’s deputy leader Tom Watson will say in a speech in London today as he appeals to 9 million Labour voters to support membership of the bloc. By staying in the EU, “more than a million new jobs” could be created “helping to provide opportunities for the next generation,” he will say.
Such arguments are struggling to gain traction. The probability of Brexit has increased to 39 per cent from 32 per cent last week, according to analysis of polls, betting and forecasts by Oxford University academics Stephen Fisher and Rosalind Shorrocks published yesterday evening.
“There has evidently been a significant move in the last few weeks,” ComRes Director of Political Polling Tom Mludzinski told the Sun. “The final week will be crucial in deciding this result with both sides trying to motivate their core voters and battling over the final undecideds.”— Bloomberg
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