Brexit 'would cost £400 a head extra in tax each year'

Holiday warning: David Cameron
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Millions of workers face a £400-a-year hike in taxes over the long term if Britain votes to leave the EU and immigration from Europe falls, economists warned today.

They forecast that net migration from EU countries would plummet by two-thirds, compared to if the country votes to stay in the union.

This would hit the economy, with GDP predicted to be lower by a startling nine per cent, and GDP per person by one per cent, by 2065 than if the UK backed Remain, according to the study for the National Institute of Economic and Social Research.

The cut in migration after quitting the EU would have a “significant negative impact” on the public finances, mainly because there would be more older people in the country relative to younger adults.

The NIESR predicted government spending would rise as a share of GDP by 1.1 percentage points in 2065, requiring an increase in taxation of about £400 per person (in 2014 money).

So post-tax wages would be two per cent lower in the Leave scenario, according to the analysis.

Report co-author Katerina Lisenkova said: “Our research shows that lower migration has an overall negative effect on the UK economy.

“In general, EU immigrants benefit the UK economy for two main reasons — they are on average much younger and are more highly qualified than the general population.”

But Out campaigners may seize on the fact that the paper only examined the effects of Brexit associated with the possible change in migration policy.

The forecast is not as gloomy as that laid out by David Cameron and George Osborne yesterday with claims — which have infuriated Brexiters — that an Out vote would destroy 73,000 jobs in London and wipe £62,000 off the value of the average home in the capital.

But it is another warning, after the Bank of England and other economic bodies, of the risks to the UK’s economy of quitting the European Union.

The Treasury report yesterday alleged that a vote to Leave could send women’s unemployment spiralling by up to 390,000, including between 10,000 and 16,000 fewer women’s jobs in the manufacturing sector and between 8,000 and 13,000 in financial services.

Shadow Treasury minister Seema Malhotra said: “That’s a price working women, their families and Britain can’t afford to pay.”

Mr Cameron also claimed today that Brexit would make family holidays to Europe £230 more expensive.

He said foreign trips would be under threat because leaving the EU would hit sterling.

The Prime Minister said: “If we were to leave and the pound were to fall, which is what most people expect and the Treasury forecasts, that would put up the cost of a typical holiday for a family of four to a European destination by £230.”

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