EU referendum: Osborne warns of Brexit budget cuts

George Osborne says he will have to slash public spending and increase taxes in an emergency Budget to tackle a £30bn "black hole" if the UK votes to leave the European Union.
The chancellor will say this could include raising income and inheritance taxes and cutting the NHS budget.

But 57 Tory MPs have said his position would be "untenable" if he tries to cut NHS, police and school spending.
And Vote Leave criticised Remain's "hysterical prophecies of doom".

The UK votes on whether to remain in the EU or to leave on 23 June.

In other referendum news:
Vote Leave set out a roadmap of what the government should do in the aftermath of a vote to leave the EU
The CBI said business groups from countries including Norway, Switzerland and Canada had outlined the "serious shortcomings" in their alternative relationships with the EU
Rolls-Royce writes to its staff saying it backs a Remain vote
Former health secretary Stephen Dorrell will say a vote to leave would undermine the NHS's finances

Scotland's First Minister Nicola Sturgeon warned that the UK voting to leave the European Union could present the risk of a "right-wing Tory takeover".

A pro-Brexit flotilla, organised by the Fishing for Leave group, will sail up the Thames

Follow all the latest developments with BBC EU Referendum Live.
In the latest of a series of government warnings about the consequences of a vote to leave, Mr Osborne will share a stage with his Labour predecessor, Lord Darling, setting out £30bn of "illustrative" tax rises and spending cuts.

These include a 2p rise in the basic rate of income tax and a 3p rise in the higher rate, while they will also say spending on the police, transport and local government could take a 5% cut.
They will also say the ring-fenced NHS budget could be "slashed", along with education, defence and policing.

Mr Osborne and Lord Darling will say the measures — £15bn of tax rises and £15bn of cuts — are based on the Institute for Fiscal Studies' predictions about the economic impact of a vote to leave from lower trade, investment, and tax receipts.

The IFS has said such an outcome could trigger between an extra one to two years of austerity measures.
Writing in The Times ahead of their speech, Mr Osborne and Lord Darling say that leaving the EU would lead to a "profound economic shock that would hit the economy and could tip Britain back into recession".

"We know all too well what happens when Britain loses control of its public finances," they wrote. "We're agreed that a vote to leave risks doing the same thing to Britain all over again."
'Cut our cloth'

Mr Osborne told Radio 4's Today that leaving the EU would be an "irreversible" step that would cause "financial instability" and leave the UK "with no economic plan", demanding an immediate response from government.

"There would have to be increases in tax and cuts in public spending to fill the black hole," he said.
The UK, he suggested, would not be able to "afford the size of the public services that we have at the moment" outside the European Union and would have to "cut its cloth accordingly".

He also played down the threat of Conservative MPs blocking an emergency Budget, suggesting that Labour and Conservative MPs would join forces to "take the necessary measures".

"No Conservative wants to raise taxes, least of all me but equally Conservative and Labour MPs understand you cannot have chaos in your public finances… a Conservative government would do what is needed to deal with huge instability in our economy."

In the interview, Mr Osborne also ruled out seeking any further concessions from the EU on immigration rules, saying his focus was on implementing restrictions on benefits negotiated by David Cameron earlier this year.

Mr Darling told ITV's Good Morning Britain that the consequence of a vote to leave the EU would be that "we'll have less money to spend on things like the NHS or education".

'Breaking pledges'

The Conservative government last year introduced legislation not to raise income tax rates, VAT or National Insurance for the duration of the Parliament.

Leave campaigners dismissed the warning from Mr Osborne.
Iain Duncan Smith, Liam Fox and Owen Paterson are among the Conservative MPs who have signed a statement saying they "cannot possibly allow" cuts to services their party promised to protect in their 2015 manifesto.

'We find it incredible that the chancellor could seriously be threatening to renege on so many manifesto pledges," they said.

"It is absurd to say that if people vote to take back control from the EU that he would want to punish them in this way."

They added: "If he were to proceed with these proposals, the chancellor's position would become untenable."

'Shocked'

Conservative MP and Vote Leave campaigner Steve Baker said: "I am shocked that the chancellor is threatening to break so many key manifesto pledges on which all Conservative MPs were elected.
"I could not support these plans to cut the NHS and increase taxes on hardworking families."

And a senior Conservative told the BBC it was "laughable" to think Mr Osborne would still be chancellor if the UK voted to leave, adding: "He'll be carried away by the men in white coats before he gets the chance to make these ludicrous proposals."
And opposition sources told the BBC that no shadow Labour chancellor "would respond to an economic shock in this manner".

"Any credible economist would tell you that raising taxes or cutting spending or both in response to an economic shock is the wrong thing to do. It's deeply worryingly that this suggests the current Tory Chancellor thinks this is a sensible response," they said.

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