Tax hikes, more austerity: Osborne’s punishing recipe for post-Brexit budget

British Chancellor of the Exchequer George Osborne. © Paul Ellis
Chancellor George Osborne has warned he will be forced to slash public spending and ratchet up taxes in order to fill a £30 billion “black hole” left in the budget if Britain votes to leave the EU in the June 23 referendum.

Speaking alongside his Labour predecessor Alistair Darling, Osborne argued an emergency “Brexit Budget,” finalized in the weeks after a Brexit vote, would include a total of £15 billion (US$21.3 billion) in tax hikes, a 5 percent rise in alcohol and gas duties, and £15 billion in spending cuts. The pair warned of a 2 percent reduction in health, defense and education spending.

“Far from freeing up money to spend on public services as the Leave campaign would like you to believe, quitting the EU would mean less money,” Osborne said on Wednesday.

“Billions less. It’s a lose-lose situation for British families and we shouldn’t risk it.”

Speaking to the BBC Today program, Osborne explained the estimates relied on a mid-range estimate of Brexit’s economic impact by the Institute for Fiscal Studies (IFS).

Fifty-seven pro-Brexit Tory MPs however have pledged to oppose the budget, branding it “unnecessary and wrong.” The group, including high-profile Leave campaigners Iain Duncan Smith and Liam Fox, said in a joint statement: “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.

“We do not believe that he would find it possible to get support in Parliament for these proposals to cut the NHS, our police forces and our schools.”

Likewise, in an interview with Sky News, Leader of the House of Commons and Brexiteer Chris Grayling advised the public to take the announcement “with a heavy pinch of salt.”

“I don’t think it’s coincidence this is happening when the Remain campaign is struggling in the opinion polls.”

Labour MP and Leave supporter Gisela Stuart echoed the Tories’ criticisms of Osborne, saying: “I simply can’t believe that Alistair Darling and the Labour Party would support an Osborne punishment budget that is designed to hit the poorest hardest.”