Following PM David Cameron's 'world war 3' warnings last week, Chancellor George Osborne joined the 'Project Fear' bandwagon today saying that Treasury is doing "quite a serious amount of contingency planning" into how Britain would deal with leaving the EU, warning of "very significant financial volatility" around the vote.
Mr Osborne denied he was "fiddling the figures" as he firmly defended an official Treasury analysis which set out the potential damage to the economy that could be caused by Brexit.
He complained that the opinions of a handful of Eurosceptic economists that the UK would be better off outside the EU were being given as much media coverage as the "overwhelming" expert opinion that it would be poorer.
The Chancellor - and senior official Mark Bowman - were grilled about the document, which looked at several post-Brexit scenarios and forecast the effects.
It found that GDP per household would end up £4,300 lower by 2030 - based on the central estimate of the range of outcomes.
The 200-page analysis was branded "dodgy" by critics and some accused the Government of trying to suggest families would each lose that sum - rather than it being a wider economic squeeze, affecting public services and other spending.
The Treasury admits it is doing "quite a serious amount of contingency planning" into how Britain would deal with leaving the EU, Bloomberg reports that George Osborne said - despite previous claims the Government was not preparing for Brexit.
Mr Osborne told MPs that his officials were working on various aspects of the impact of a Leave vote in the June 23 referendum as he was grilled by the Commons Treasury select committee.
David Cameron has been criticised for insisting that civil servants were not planning for the eventuality, despite warning that it would be catastrophic for the country.
As recently as Tuesday his spokesman told reporters: ''We are not doing any contingency planning for the referendum being a vote to leave."
In his evidence to the committee, Mr Osborne said: "I think there would be very significant financial volatility around a vote to leave, and the Bank of England and the Treasury are doing quite a serious amount of contingency planning for the impact on financial stability in the aftermath of a vote to leave.
"I don't think it's appropriate to go into too much detail on that, but we have made public various things, like the fact we would have additional liquidity auctions."
Relief in global markets that a Fed rate hike is less imminent has taken focus away from one of this year’s biggest risk events, at least temporarily, but as Bloomberg's Mark Cudmore explains "The Fog of Brexit" remains...
Markets may not reflect the fact now, but uncertainty around the outcome of the U.K. referendum is increasing -- not decreasing.
The latest poll shows the vote has tightened, while support for Brexit is gaining ground among “senior” business people, according to the British Chambers of Commerce.
The looming vote is already interfering with economic analysis and forecasts. The Bank of England’s Inflation Report tomorrow will emphasize the recent soft data but it may be too soon to determine whether this is a transitory, referendum-related dip or a lasting downturn.
There is even greater unpredictability around the economic effects of the U.K. electing to leave the EU.
According to the U.N., approximately 1.3 million Britons live in other EU countries -– will hundreds of thousands of U.K. pensioners be forced to return home to ensure free healthcare?
Will the U.K. get a sudden jolt of wage inflation if immigrant labor is forced to depart?
A vote for Brexit would also be the first time the union’s process of ever-greater integration has taken a serious backward step.
As markets are reminded that implications won’t be contained within the U.K., risk-reduction could spread to global asset markets as the vote approaches.
Familiarity breeds contempt. Investors may be growing uninterested in the seemingly inconclusive Brexit debates-- but it’d be misguided to be complacent around the threat it poses...
Perhaps, given The Brits natual skepticism, it's time for the establishment to stop talking - but then again, that will never happen.