The U.K. will have to plug a £30 billion (€37.9 billion) budget “black hole” if it leaves the EU after the June 23 referendum, the country’s chancellor will say in a speech Wednesday.
That would mean the government will need to impose harsh cuts to public spending and increased taxes, George Osborne is due to say, according to excerpts of his speech sent to local media.
“I would have a responsibility to try to restore stability to the public finances and that would mean an emergency budget where we would have to increase taxes and cut spending,” Osborne will say.
The chancellor will indicate he’d make up the shortfall half from tax increases and half from spending cuts.
The basic rate of income tax would increase by 2 percentage points to 22 percent and the higher rate would go up by 3 percentage points to 43 percent, Osborne is expected to say. Inheritance tax rates and duties on alcohol and petrol would also likely need to increase.
Health, education, defense and pension spending would face cuts of about 2 percent.
Osborne will speak alongside Alistair Darling, the U.K.’s previous chancellor, who oversaw several of the country’s budgets during the financial crisis.
“I am even more worried now than I was in 2008,” Darling will say, according to excerpts of his speech also provided to the press. “The Leave campaign has no idea, no plan whatsoever. Any political party seeking election on such a flimsy and fraudulent prospectus would have been torn to pieces by now.”