Finance minister George Osborne said on Wednesday he would introduce an emergency budget if Britain voted to leave the European Union, but 57 of his own Conservative Party’s lawmakers said they would block the measures.
Britons will vote in a referendum on June 23 on whether to stay in the 28-member bloc, and the ruling party is profoundly split with Osborne and Prime Minister David Cameron battling for a “Remain” vote while other senior figures campaign for “Leave”.
With opinion polls showing momentum swinging towards Leave, Osborne intensified the tone of his warnings about the consequences of a so-called Brexit, saying he would respond by increasing taxes and cutting spending.
“We would either have to get more money in by raising taxes like income tax or you have to spend less on the big public services like the health service, or the education system or the defence budget,” Osborne said in an interview on BBC radio.
“The country does not have a plan if we quit the EU. We’d wake up in just over a week’s time with no economic plan for our country, with financial instability, with years of uncertainty and you’d have to cut your cloth accordingly. The country would not be able to afford the size of the public services that we have at the moment,” he said.
The official Vote Leave campaign hit back with a withering statement it said was signed by 57 Conservative lawmakers including former party leader and cabinet minister Iain Duncan Smith, among other well-known figures.
“It is absurd to say that if people vote to take back control from the EU that he would want to punish them in this way. We do not believe that he would find it possible to get support in Parliament for these proposals,” the statement said.
“If the Chancellor is serious then we cannot possibly allow this to go ahead … If he were to proceed with these proposals, the Chancellor’s position would become untenable.”
“REAL MONEY IN THE REAL WORLD”
The government currently has a working majority of 17 in the House of Commons.
The war of words represented an escalation in the internal conflict tearing the Conservative Party apart, and raised the prospect of a government unable to operate normally in the event of a victory for Leave.
The opposition Labour Party, which has 229 lawmakers, has opposed austerity measures for six years, and one of its pro-Brexit members, Gisela Stuart, said her colleagues would never vote for what she called Osborne’s “punishment budget”.
An opinion poll published late on Tuesday showed the once double-digit lead of the “In” campaign had narrowed to just 1 percentage point. Other polls have shown the “Out” camp ahead, reducing the value of sterling and wiping billions of dollars off global stock markets.
“This isn’t warnings just from a Conservative chancellor, this is real money out there in the real world and this is the irreversible decision we face next Thursday,” Osborne said.
He was due to give a speech later alongside his predecessor as finance minister, Labour’s Alistair Darling, who was in post during Britain’s descent into the financial crisis in 2008.
“I am even more worried now than I was in 2008,” Darling was due to say. “The Leave campaign has no idea, no plan whatsoever.”
According to excerpts of Osborne’s speech circulated by the official Britain Stronger In Europe campaign, he was due to detail 30 billion pounds’ worth of fiscal measures, half from tax increases and half from lower spending, to offset the impact of Brexit on public finances as estimated by independent forecasters.
The basic rate of income tax would rise 2 percentage points to 22 per cent and the higher rate would go up by 3 percentage points to 43 per cent, he was due to say. Inheritance tax rates and duties on alcohol and petrol would also rise.
Spending on health, education and defence, so far largely shielded from Osborne’s six-year push to reduce Britain’s budget deficit, would be cut 2 per cent, and pensions spending would face a similar reduction, according to Osborne’s speech.