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Conventional wisdom dictates that elections are won or lost on the economy. So with the polls moving against them, the campaign to keep Britain in the EU is pulling out all the stops to shift the debate back to their favoured ground.
On Thursday, George Osborne will use an annual speech to City of London executives to amplify his warnings that a vote to leave the EU will put the nation’s prosperity at risk.
Sitting alongside him will be Mark Carney, the Bank of England governor who has previously warned that leaving could push the UK into a short-term recession.
But instead of talking about Brexit, Mr Carney will use his speech to the Mansion House audience to talk about what developments in financial technology will mean for the financial system.
Mr Carney has not lost interest in Brexit but the BoE believes that purdah regulations — which control what public officials can do or say during an election campaign — mean he should not make further comments ahead of the referendum on June 23.
However, on the same day, the bank’s Monetary Policy Committee, which sets interest rates, will publish minutes of their monthly meeting. These are expected to reiterate that the Brexit referendum is the biggest domestic risk to the economy.
Mr Osborne warned on Wednesday that Brexit would require an emergency Budget containing swingeing tax rises and spending cuts.
More than 60 Conservative MPs have signed a letter saying the Chancellor’s position would be “untenable” if he tried to push the package through.
Many economists also believe it is far more likely the government would have to launch an immediate stimulus package, rather than imposing more austerity.
“Frankly, this is scaremongering”, says Jonathan Portes, senior fellow at research group UK in a Changing Europe, adding that it would be “entirely the wrong response to a Brexit shock”.
“If the economy were hit so badly, it seems very unlikely that the government would exacerbate this in the near term by ramping up austerity and sending the public finances and economy into a downward spiral”, said Vicky Redwood, chief UK economist at Capital Economics.
But one reason to at least announce a plan to raise taxes and cut spending in the medium term would be to reassure lenders that the government had a grip on the public finances.
Rupert Harrison, Mr Osborne’s former chief of staff, points out that this is what happened in 2008. Even though Labour cut taxes in response to the global financial crisis in 2008, “pre-announced tax rises and spending cuts were part of the emergency response” in November that year.
Even committed supporters of Brexit acknowledge there would be a short-term economic hit from a vote to Leave, mainly due to the initial loss of confidence and uncertainty.
Practically all assessments — whether from international bodies such as the OECD and the International Monetary Fund, or academics like the Centre for Economic Performance — agree that by 2030 Britain would be poorer.
Rather than give a single figure for growth in the event of Brexit, most give a range of projections depending on the trading relationships the UK builds.
Oxford Economics, a consultancy, estimates that Brexit would harm Britain’s economy in eight out of nine scenarios, with the impact ranging from 0.1 to 3.9 per cent of GDP by 2030. This is mainly because the cost of trade is projected to rise.
The only favourable scenario is one in which migration continues as it does now, Britain gets rid of labour regulations and stays in an EU customs union.
The one big exception to the consensus is the modelling by Professor Patrick Minford of Cardiff University. He presents an optimistic scenario where GDP is boosted by 4 per cent by 2020, with all import tariffs unilaterally scrapped and the economy boosted by the dumping of regulations in areas such as working hours, gender equality and climate change.
However, Prof Minford has himself said that the UK’s manufacturing industry would be mostly eliminated when exposed to global price competition.
It is questionable whether such a dramatic development — together with the mass removal of working rights — would be politically deliverable.