Brexit Could Blow £100bn Hole In Economy - CBI

A UK vote to leave the European Union could cost the UK economy £100bn and 950,000 jobs by 2020, according to research commissioned by the Confederation of British Industry.

The CBI said Brexit would deliver a "serious shock" to the economy regardless of any trade deals the country could negotiate with its former European partners.

"This analysis shows very clearly why leaving the European Union would be a real blow for living standards, jobs and growth," CBI director-general Carolyn Fairbairn said in a statement.

"The savings from reduced EU budget contributions and regulation are greatly outweighed by the negative impact on trade and investment. Even in the best case this would cause a serious shock to the UK economy."

The CBI, which mainly represents larger British businesses, commissioned accountants PwC to examine two different exit scenarios - one at the optimistic end of the range, and the other recognising the likelihood of trade deals being concluded.

Under both, it said British living standards, economic growth and employment would be significantly reduced compared with staying.

Economic output could be curtailed by as much as about 5% of GDP by 2020, or £100bn, it said, while even in a scenario where a free trade agreement with the EU was rapidly secured, GDP might still be reduced by 3%.

Andrew Sentance, senior economic adviser at PwC, said: "The three big impacts of leaving the EU we have been able to identify are increased uncertainty, a negative shock to trade and investment, and reduced labour supply through migration.

"While the potential to reduce the burden of regulation and lower fiscal contributions to the EU could be offsets, the net impact of the UK leaving the EU is still likely to be negative for GDP, employment and living standards, both in the short-term and the long-term."

The CBI, which has said it will promote the economic case for Britain to remain in the EU, has been criticised by anti-EU campaigners who say the business community is split on the issue.

Matthew Elliott, chief executive of Vote Leave, said: "Even in the CBI's skewed choice of scenarios for exit, they are forced to admit that employment and the economy will continue to grow after we vote Leave.

"The EU-funded CBI are desperate to recreate the same scare stories they spread when they urged Britain to scrap the pound and join the euro. They were wrong then and they are wrong now."

But Lucy Thomas, deputy director of the Stronger In campaign, said: "This report is yet another clear indicator of the dangerous gamble that leaving Europe would be for people's jobs, prices in the shops and Britain's economy."

Last week, the CBI published research showing that 80% of its members wanted to stay in the EU, while just 5% thought leaving the bloc would help them.

John Longworth, the director general of the British Chamber of Commerce, resigned this month after he went public with his anti-EU views, breaching the neutral position adopted by his organisation.

The UK's in-out referendum will take place on 23 June.