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Get ready for an economic crash if Britain leaves the EU

May 23, 2016, 13:18 IST

German chancellor Angela Merkel laughs as she poses with a model dressed as crash test dummy at the IAA international car show in Frankfurt, September 13, 2007. REUTERS/Kai PfaffenbachREUTERS/Kai Pfaffenbach

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Britain's economic growth could tank by 3.6% in the event of leaving the European Union, according to a report by the Treasury.

Under a shock scenario, the UK's GDP would be 3.6% lower than the current forecast for a 4.3% increase by 2018.

The falling pound would drive prices for imported goods upwards, meanwhile house prices would drop by about 10% across the country, according to the report..

Under a less likely, but more severe, scenario, GDP could fall by as much as 6%.

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The government is trying to sway voters to stay in the EU. The referendum on June 23 "is more important than a general election," Prime Minister David Cameron said on Sunday

If voters don't like a government they can kick them out after five years but reversing a decision to leave the EU would be "very very difficult," Cameron said.

He said the shock to the economy of a Brexit would be severe. Leaving the European Union could add £220 a year onto each household's food bill, said in an interview with ITV's Robert Peston.

Cameron said that supermarket bosses warned "prices would go up if we left the EU because there'd be a shock to the economy, the pound would fall, and that would mean the prices we pay in this economy would be higher, particularly for food because we import so much."

"Is it worth taking this risk? I, as Prime Minister of this country, absolutely believe it is not worth the risk of taking this step," Cameron said.

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The campaign appears to be working. The probability of Britain voting to leave the European Union on June 23 is currently less than 20%, according to polling analyst Matt Singh.

Singh, the polling analyst behind Number Cruncher Politics (NCP), said in his latest blog post that while some of the results of polls published this week have been dramatically varied, they don't change the overall picture of Remain being the most likely victors.

In fact, according to his updated forecast, the probability of Britain voting to leave the EU is just 19.6%.

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