A day after revealing its top line (and allowing plenty of time for the pro-Brexit camp to offer their arguments against it), the Treasury has released its 200-page report into the impact leaving the European Union will have on the UK.
In it, the government department argues that whichever way you cut it, "the UK’s economic openness and interconnectedness would be reduced".
But the repercussions are no less serious when you look further down the road. Here's one excerpt from the report.
Trade and investment flows would be lower. The UK would be permanently poorer if it left the EU and adopted any of these models. Productivity and GDP per person would be lower in all these alternative scenarios, as the costs substantially outweigh any potential benefit of leaving the EU.
What is the framework for the analysis?
The Treasury has considered three models: what it would be like if the UK had a Norway-style membership of the EEA; if it negotiated a bilateral trade agreement such as the one that exists between the EU and Switzerland, Turkey or Croatia, and what it would be like if the UK was a member of the WTO without any specific agreement in place with the EU, in the manner of Russia or Brazil.
What would be the impact of a Brexit?
The Treasury estimates that the total cost to households would be
- £2,600 in the case of EEA
- £4,300 in the case of a negotiated bilateral agreement
- And £5,200 in the WTO
This is what that looks like
The Treasury also argues that tax receipts would be "substantially weaker", meaning any potential gain from a drop in the amount of money the UK pays to the EU would be "significantly" outweighed.
There is an implied threat that this could lead to greater austerity measures. The report says
The result would be higher government borrowing and debt, large tax rises or major cuts in public spending. After 15 years, even with savings from reduced contributions to the EU, receipts would be £20bn a year lower in the central estimate of the EEA, £36bn a year lower for the negotiated bilateral agreement and £45bn a year lower for the WTO alternative.
£36bn is more than a third of the NHS budget and the equivalent of 8p on the basic rate of income tax.
The Treasury says these figures are based on how the EU is today "without further reform", but warns the total cost is "likely to be higher" because the reforms secured by Prime Minister David Cameron are less likely to occur if the UK leaves the bloc.
The impact on individual sectors
While the Vote Leave campaign is focusing on what a clamp down on free labour movement might mean for the UK, the Treasury argues that a Brexit would have a huge impact on employment, noting that around 3.3m jobs are linked to exports from the UK to the EU.
According to its analysis, London actually comes out worse, with around 650,000 jobs potentially at risk in the event of a Brexit. But relatively, the impact could be greater in other parts of the country - the North West, for example, has 350,000 at-risk jobs, while Yorkshire and the Humber has 250,000.
The flip side of leaving the EU is its effect on immigration, but the Treasury says that if the UK follows the least-worst option of staying in the EEA there will be "no change to net migration relative to being inside the EU as the same rules would apply". The second option would also "involve accepting free movement of people". But the third - WTO - option could result in a drop, although this "would depend on the government's policies following a vote to leave".
It is also likely that any action by the UK government to reduce immigration would be met with reciprocal action by other EU countries, which would potentially reduce emigration from the UK. This would offset some of the reduction in overall net migration. There could also be pressure to pursue more liberal immigration policies vis-a-vis non-EU countries in order to promote new free trade deals.
The Treasury also points out that while "unskilled immigration is too high" EU migrants make a net contribution to the UK's public finances, "and so to the funding of public services".
The report notes that reforms secured by David Cameron will establish "new powers to tackle the abuse of free movement and reduce the natural draw of the in-work benefits system".
Having already insisted that the UK gets more out of its EU membership than it loses, the Treasury report then goes on to show all the areas that benefit from the rebate.
Some regions benefit more than others - Cornwall and the Isles of Scilly receive the equivalent of €1,000 per head across the current seven-year deal, for example. Here's how it breaks down according to sector.
Breaking it down: What does all this mean?
The Treasury says that the least-worst outcome (the EEA alternative) would still have an economic impact greater than the total spent on both policing and prisons. The worst outcome (the WTO option) would carry a bigger cost than what is spent on the entire schools budget for England.
None of the alternatives come close to matching the net economic benefits to the UK of EU membership. Using a negotiated bilateral agreement like Canada as the central assumption for the alternative, the UK economy is 6.2 per cent larger in the EU, British families are £4,300 better off in the EU, and the UK’s receipts are £36 billion healthier in the EU. The overall economic benefits of EU membership are significantly higher than in any potential alternative.
How certain can they be about all this?
Given the unprecedented nature of a Brexit, the Treasury does acknowledge that any analysis is "subject to uncertainty", and admits that certain assumptions have had to be made in order to create these estimates.
More to follow...