Unveiling Treasury analysis today, he said a ‘Brexit’ would cause an “immediate and profound economic shock” across the country.

The complex negotiations to agree the terms of Britain’s exit from the EU and its new relationship with the rest of Europe would add to the instability and uncertainty, he added.

Echoing the recent warnings from the Bank of England and the International Monetary Fund, the Treasury’s new analysis concluded a ‘leave’ vote would push the UK into recession and lead to a sharp rise in unemployment.

The Treasury’s key points:
In the ‘shock’ scenario, which uses cautious assumptions and links the size of the transition effect to the central estimate of the UK adopting a negotiated bilateral agreement with the EU:

• GDP would be around 3.6% lower after two years compared to the forecast for continued growth after a vote to remain
• Average real wages would be nearly 3% lower, which is a pay cut of almost £800 a year for someone working full time on the average wage
• 500,000 UK jobs would be lost and the value of the pound would fall by around 12%
• Inflation would also increase by over 2 percentage points and the value of people’s homes would be hit by 10% compared to Britain remaining in the EU, with a rise in uncertainty from current levels similar to that experienced in the UK during the early 1990s recession.

In the ‘severe shock’ scenario – which, the Treasury said represented a ‘credible risk’ – the size of the transition effect is linked to the estimate of Britain leaving the Single Market and defaulting to World Trade Organisation membership:

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• After two years GDP would be 6% lower
• 800,000 UK jobs would be lost, compared to a vote to remain.
• The value of the pound would fall by 15% and there would be a further increase in inflation of 2.7 percentage points, with a hit to the value of people’s homes of 18%.

Osborne said: “We’ve spent six years dealing with what happens when recession hits this country – we’ve got one month to make sure we don’t do it to ourselves all over again. One month to avoid a DIY recession. The Treasury analysis shows Britain will be stronger, safer and better off if we vote to remain in the EU on 23 June.”

Commenting on the report, TUC General Secretary Frances O’Grady said: “The forecast from the Treasury gives us half a million good reasons to stay in the EU. Job loss can be devastating, especially if you have to look for work in the middle of a recession. It’s too big a risk for working people to take.”