British Finance minister George Osborne giving evidence to the Commons treasury select committe on EU membership, May 11, 2016.STR/AFP / Getty Images
Britain's Chancellor of the Exchequer George Osborne said the Treasury and the Bank of England are making contingency plans to stabilize financial markets should Britain vote to leave the European Union next month.
Mr. Osborne said Britain's public finances "would take a significant hit" in the event of a so-called Brexit. While he refused to comment on the details of planning to mitigate the impact on markets, he highlighted the BoE's plans for additional liquidity auctions around the time of the June 23 referendum.
"I think there would be very significant financial volatility around a vote to leave," Mr. Osborne told Parliament's Treasury Committee Wednesday. "The Bank of England and the Treasury are doing quite a serious amount of contingency planning on financial stability around the impact of the immediate aftermath of a vote to leave."
Mr. Osborne, who appeared in front of the committee to defend the Treasury's April report on the consequences of Brexit, said there's an "overwhelming" international consensus that leaving the EU would make Britons worse off and rejected accusations the government had overdramatized the case for staying in the bloc. Brexit campaigners dismissed the Treasury report as "propaganda" and "scaremongering."
"If you look at the sheer weight of opinion, it is overwhelmingly the case that people who look at the case for leaving the EU come to the conclusion it would make the country poorer, and it would make the individuals in the country poorer, too," Mr. Osborne said. He said he hopes it's something "that the public come to see and understand in the way that those facts in the referendum debate are presented."
The Chancellor said major independent institutions such as the BoE, the International Monetary Fund and the Organization for Economic Co-operation and Development had backed the Treasury's warnings on the economic consequences of an exit.
In its assessment published on April 18, the Treasury warned that Britain would suffer permanent damage if it leaves the EU, with economic output as much 7.5 per cent lower after 15 years than it would be otherwise. Since then, the pro-EU campaign has received support from world leaders including U.S. President Barack Obama and Japanese Prime Minister Shinzo Abe.
A second report by the Treasury on the shorter-term impact, including the effect on British house prices, will be published later this month.
Mr. Osborne's testimony came hours after former prime minister Gordon Brown made his first major intervention in the campaign to keep Britain in the EU, and Boris Johnson, the most prominent proponent of leaving, started a nationwide bus tour to push for Brexit.
In a separate intervention, Italian Finance Minister Pier Carlo Padoan said he was "very worried" that a vote for Brexit could inspire other EU members to follow suit.
"Let's not forget we are witnessing a widespread discontent about European values and strategies, so Brexit could lead the way to more painful disentanglement of Europe," Mr. Padoan said on Wednesday in an interview with Bloomberg Television's Francine Lacqua in London.