DHAKA: A UK vote to leave the European Union would cause an ‘immediate economic shock’ that could slow house price growth, George Osborne has said.

In the event of a vote for Brexit, by 2018, houses could be worth up to 18% less than if the UK voted to remain, the chancellor told the BBC.

But Andrea Leadsom of Vote Leave said Osborne’s claim was ‘extraordinary’.

The energy minister said, ‘The greatest threat to the economy is the perilous state of the euro’.

An analysis by the Treasury to be published next week will suggest that two years after a Brexit vote, UK house prices could be between 10% and 18% lower than after a remain vote, Osborne told the BBC.

‘If we leave the European Union, there will be an immediate economic shock that will hit financial markets... People will not know what the future looks like,’ he said.

‘And in the long term, the country and the people in the country are going to be poorer. That affects the value of people’s homes... And at the same time, first-time buyers are hit because mortgage rates go up, and mortgages become more difficult to get. So it's a lose-lose situation,’ he added.

Osborne’s comments echo those made by the International Monetary Fund last Friday, which said a Brexit could cause a ‘sharp drop’ in house prices.

But his fellow minister Leadsom said, ‘This is an extraordinary claim and I’m amazed that treasury civil servants would be prepared to make it’.

The truth is that the greatest threat to the economy is the perilous state of the euro; staying in the EU means locking ourselves to a currency zone - which Mervyn King, ex-governor of the Bank of England, has rightly warned ‘could explode’.

The safer option in this referendum is to take back control of the vast sums we send to Brussels every day and Vote Leave on 23 June.’

BDST: 1158 HRS, MAY 21, 2016
RR