OECD warns against so-called ‘Brexit,’ calling it equivalent to a new tax
U.K. Independence Party leader Nigel Farage brushed off the Brexit warning as coming from "...overpaid people who failed in politics"
LONDON—The head of the global economic forum OECD warned Britain that leaving the European Union would be tantamount to taxing its citizens—another in a growing cavalcade of cautionary advice ahead of a June 23 referendum on membership in the 28-nation bloc.
The warning by Angel Gurria, the secretary-general of the Organization for Economic Co-operation and Development, came just days after expressions of concern by President Barack Obama, the U.K. Treasury and the International Monetary Fund. He described the notion that Britain might gain a better trade deal outside the union as somewhat fanciful.
“Brexit is like a tax,” he told the BBC ahead of publishing a full analysis of the implications of the vote. “It is the equivalent to roughly missing out on about one month’s income within four years but then it carries on to 2030.”
Gurria’s assessment follows one made by the U.K. Treasury last week, which determined that leaving the European Union would cost Britain the equivalent of $6,100 per household. The estimate was based on an analysis of the long-term costs and benefits of EU membership and its alternatives.
The ever-more dire OECD judgment came the same day that authorities reported Britain’s economy slowed in the first three months of the year amid concerns about the global economy as well as the vote on EU membership.
The U.K. economy grew by a quarter-on-quarter rate of 0.4 per cent in January-March, down from 0.6 per cent in the fourth quarter of last year, the Office for National Statistics said Wednesday. Services, which comprise 78 per cent of the British economy, continued to grow, expanding by 0.6 per cent. But other sectors declined, including construction, mining and manufacturing.
Chris Williamson, chief economist of Markit, said uncertainty about the economic outlook “appears to have intensified” ahead of a June 23 referendum on EU membership.
“The danger is that this will cause a lull in businesses decision making as the June vote draws closer, which will in turn reduce business spending, investment and hiring in the second quarter,” he said.
One of the leading members of the campaign to leave the EU, Nigel Farage, dismissed the concerns and the people who made them.
“Yeah, yeah, yeah—IMF, OECD, a whole series of international organizations stuffed full of overpaid people who failed in politics mostly,” he told the BBC.
When asked to name organizations that backed the so-called Brexit idea, he said: “They are called markets, they are called consumers, they are called people and they are called the real world.”
Farage said Britain would obtain a “bespoke” deal better than those obtained by “little countries like Norway and Switzerland” where people had been “betrayed by their politicians.”