Row over OECD warning of "Brexit tax"

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The OECD’s Angel Gurria says leaving the EU would be a “bad decision”

Leaving the EU would be the equivalent of imposing an additional “tax” of one month’s income on UK workers, a leading economic think-tank has said.

The Organisation for Economic Co-operation and Development (OECD) said economic growth would be lower outside the EU as the UK could not negotiate a “sweeter” deal on trade and investment.

But Vote Leave said the body was “in the EU’s pay”, getting £23m since 2007.

And UKIP’s Nigel Farage said “markets not failed politicians” decided trade.

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The OECD will release its assessment of the economic consequences for the UK of leaving the EU later on Wednesday.

But, ahead of the report’s publication, its secretary general Angel Gurria told the BBC that he had no doubt that leaving would be a “bad decision” and expressed surprise that the UK was even contemplating such a move.

‘Like a tax’

“Brexit is like a tax. It is the equivalent to roughly missing out on about one month’s income within four years but then it carries on to 2030,” the former Mexican politician told BBC Radio 4’s Today programme.

“That tax is going to be continued to be paid by Britons over time.”

This forecast, he explained, was based on the assumption that growth rates would be lower-than-expected outside the EU because there was “no kind” of trade deal that the UK could do “better by yourselves than you would be in the company of the Europeans”.

“We have done the comparisons, we have done the simulations,” he said.

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Leave campaigners say the UK will be able to trade more freely outside the EU

“In the end we come out and say: why are we spending so much time, so much effort and so much talent in trying to find ways to compensate for a bad decision when you do not necessarily have to take the bad decision?

“This is not wishful thinking – which we believe that the Brexit camp in many cases has been assuming. There is absolutely no reason why you would get a sweeter trade deal than you already have, no reason why you would have a sweeter investment deal.”

Mr Gurria has led the OECD since 2005. While serving in the Mexican government in the 1990s, Mr Gurria helped negotiate the North American Free Trade Agreement with the United States having previously led two major banks.

The OECD’s views echo those of other international organisations, such as the IMF, which has warned that the UK and Europe would face a “severe” economic shock in the event of a vote to leave.

The Treasury has estimated that GDP would be 6% lower by 2030 and that this could leave households £4,300 worse off on average than they otherwise would have been.

‘Not impartial’

The latest warning was welcomed by pro-EU ministers. Chief Secretary to the Treasury Greg Hands said the OECD was “widely respected”.

But Vote Leave, the main cross-party group campaigning to leave the EU, questioned the OECD’s past economic forecasts and said it was not “impartial” as it had received EU funding every year between 2007 and 2014 totalling £23.6m ($30.5m)

“The OECD is in the pay of the EU,” said its head of media Robert Oxley. “José Ángel Gurría is part of a global bureaucracy

“The OECD said that the UK would receive ‘great benefits’ from joining the ERM. It recommended that we should join the euro. So why should we listen to their doom-laden predictions about leaving the EU?”

“After we vote Leave and take back control we will be able to cut our tax bill because we will no longer have to fund overpaid and under taxed international bureaucrats in Brussels. This will be bad for fat cat officials but good for the British people.”

UKIP leader Nigel Farage told BBC Radio 4’s Today organisations like the OECD and the IMF were staffed by “overpaid former politicians who failed mostly” and the UK would be “better off” by being able to trade freely outside the EU.

“These international bodies, there is virtually nobody working for them that has manufactured a good or traded a product globally.

“The fact is whether we are in or out of the EU, we will go on buying and selling goods between France, Germany, Britain and Italy because ultimately markets are not created by politicians, it is about consumers making choices.”

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Row over OECD warning of "Brexit tax"
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