A Brexit would result in each household being worse off by the equivalent of £4,300 ($6,100) a year, according to George Osborne, who warns that a vote to leave would be the "most extraordinary self-inflicted wound". The Chancellor's remarks come as he prepares to publish a 200-page Treasury report assessing the costs and benefits of EU membership on 18 April.
The report claims that the UK's economy would shrink by 6% by 2030 if voters choose to leave the EU in the upcoming referendum on 23 June. Higher trade barriers will also hit exports and both foreign and domestic investment in the UK will be lower, the analysis says.
Some 44% of British exports go to the EU compared to less than 8% vice versa and the report argues that the UK's membership of the EU is the best option. "The Treasury analysis shows that under all plausible alternatives to British membership of the EU we would have a less open and interconnected economy – not just with Europe but, crucially, with the rest of the world," Osborne wrote in a Times column on 18 April.
"There would be less trade, less investment and less business. Leave the EU, and the facts are: Britain would be permanently poorer. Britain's families would be permanently poorer too," he added.
Canada-style bilateral deal with the EU an option?
London Mayor Boris Johnson has favoured a Canada-style deal, which effectively eliminates customs duties from some products. By 2023, nearly 92% of EU agriculture and food products will be exported duty-free to Canada, according to the European Commission.
But this has been rejected by Osborne, who said it does not match the current benefits and that breaking away from our European partners would lead to an economic contraction of 6% by 2030. "It is a well-established doctrine of economic thought that greater openness and interconnectedness boosts the productive potential of our economy," he said.
"That's because being an open economy increases competition between our companies, making them more efficient in the face of consumer choice, and creates incentives for business to innovate and to adopt new technologies.
The 6% figure is likely to provoke a strong reaction from Eurosceptics as it is significantly higher than other recent independent studies.
A study by Oxford Economics estimated a 3.9% contraction in the British economy while PricewaterhouseCoopers (PwC) put the decline at 3.5%.
The gloves are off as the EU referendum campaign heats up
The mayor of London took a big swing at pro-EU supporters on 15 April after branding them the "Gerald Ratner of modern politics." The jeweller famously called his own product's c**p in 1991.
"The EU – they say, 'It's cr*p but we have no alternative," Johnson said in Manchester. "Well we do have an alternative, and it is a glorious alternative."
Striking back at critics in his article – which the Times says is likely to "rile senior Conservatives" – Osborne said: " So engage in the issues rather than complaining endlessly about process.
"This is too important a question for Britain for you to pass on the answers. Every time you cry wolf about Project Fear, you only expose how weak and friendless your case is."