A vote to leave the EU could cost the UK nearly a million jobs by 2020, a financial services giant has warned.
However, the figure is mainly due to a fall in inward migration.
In the report from PwC for the Confederation of British Industry (CBI), the number of people in work is expected to be 32.2m in 2020 if the UK votes to stay. Yet this could be up to 950,000 lower depending on whether or not a free trade deal is secured.
The Office for Budget Responsibility, the government’s fiscal watchdog, has a similar estimate on jobs growth. It believes employment will rise 900,000 by 2020, but expects three-quarters of new workers to be migrants.
“It should be noted that lower migration accounts for a significant proportion of this reduction in employment in the EU exit scenarios,” PwC’s report said. The CBI has not been shy in its support for remaining in the EU.
The biggest short-term cost of leaving is expected to be caused by uncertainty over the UK’s trade and migration arrangements. This will knock 1.9 per cent off the economy by 2020, provided the UK has arranged, or is in the process of arranging a new free trade agreement with the EU. By 2030 its impact is minimal at minus 0.1 per cent.
The largest long term impact is expected to come from the UK’s trade.
“As with any economic modelling exercise, our estimates are subject to many uncertainties. They should therefore only be taken as indicative of the broad direction and order of magnitude of the potential economic impacts of alternative exit scenarios,” the report said.
“This analysis shows very clearly why leaving the European Union would be a real blow for living standards, jobs and growth,” said CBI director-general Carolyn Fairbairn.
Matthew Elliott, chief executive of Vote Leave, said: “Even in the CBI’s skewed choice of scenarios for exit, they are forced to admit that employment and the economy will continue to grow after we vote leave.”