London / Bloomberg
The U.K. risks a decade of uncertainty if voters choose to leave the European Union in an in-out referendum in June, according to a government report released Monday.
The U.K.’s trading arrangements with the EU are unlikely to be completed within the two-year negotiating process stipulated by the Treaty of the European Union, and its commerce with the wider world is also likely to be affected by a withdrawal, according to the report produced by the Cabinet Office.
“Uncertainty during the negotiating period could have an impact on financial markets, investment and the value of the pound, and as a consequence on the wider economy and jobs,” the report said. “A vote to leave the EU would be the start, not the end, of a process. It could lead to up to a decade or more of uncertainty.”
The government is stepping up its rhetoric in favor of staying in the EU as polls show a narrow advantage for the “remain” camp ahead of the June 23 vote. The British pound completed its worst week since the 2009 recession on Friday after a string of politicians including London Mayor Boris Johnson and Justice Secretary Michael Gove lined up for the “leave” side, opposing Prime Minister David Cameron.
‘Campaign of Fear’
Ministers supporting continued membership of the EU have repeatedly stressed Britain will be “stronger, safer and better off” within the 28-nation bloc. That’s prompted accusations of scaremongering from those campaigning for a British departure from the EU, or ‘‘Brexit.’’ “People will not be impressed with this relentless campaign of fear,” Leader of the House of Commons Chris Grayling, who is campaigning to leave the EU, said in a statement. “Claims that it will take twice as long to sort out a free trade deal with the EU as it did to win World War II are clearly ludicrous. There’s a free trade zone from Iceland to the Russian border and Britain will still be part of it after we vote ‘leave.’”
The process of withdrawal is “unprecedented” and involves “unraveling all the rights and obligations — from access to the single market, to structural funds for poorer regions, to joint action on sanctions — that the U.K. has acquired both during our accession to the EU and over our 40-year membership,” according to Monday’s report.
Any extension to the two-year negotiating process would require the agreement of all 27 remaining EU members, and any one of them could veto the extension, according to the study. That would leave U.K. businesses without preferential trading arrangements with the rest of the bloc, and halt the ability of Britons to move freely around the continent, it said.
A departure before negotiations are completed would also leave trade with the EU governed by World Trade Organization rules, so the U.K. could face tariffs approaching 30 percent for sugar and confectionery and of more than 10 percent for beverages, tobacco, fruit and fish, according to the study.