DHAKA: Low income families could receive hundreds of pounds less in benefit payments if the UK leaves the EU, according to an economic think tank.

In its central forecast, the National Institute of Economic and Social Research (NIESR) said some households could lose up to £2,771 a year.

Falling national income might result in cuts to the welfare budget by 2020, the NIESR study said, reports the BBC.

The Vote Leave campaign said the report was based on ‘dodgy’ assumptions.

Using existing forecasts, NIESR assumed that national income will fall by up to 6% by 2020 if the UK leaves the EU, compared to what it otherwise would have been.

It also assumed that the government would stick to its promise to balance the books by 2019/20.

In that case, it said, the government would need to save £44bn by the end of the decade, a large proportion of which could come from the welfare budget.

However, the government could choose instead to cut other areas of spending or raise taxes.

The welfare budget represents about 28% of all current government spending, according to the Office for Budget Responsibility (OBR).

‘Based on these assumptions, our results show that a disproportionately large share of the costs of Brexit is likely to fall on low income households,’ said Angus Armstrong, one of the report authors and a former Treasury official.

The NIESR report used existing forecasts from seven published sources, including the Treasury. But none of these use a ‘dynamic’ model.

In other words they take no account of any policy changes that might be announced in response to a UK exit from the EU, such as a cut in base rates by the Bank of England.

BDST: 1001 HRS, JUN 10, 2016
RR