Leaving the EU would cause a year-long recession, Treasury analysis finds

Vote Leave however said the Treasury was 'deeply biased'

Leaving the European Union would send Britain into a year-long economic recession, a new analysis by the Treasury has warned.

The report, released on Monday says Brexit would reduce economic growth by a further 3.6 per cent,

The Chancellor George Osborne says his deparment’s evidence suggests a Leave vote would cause an “immediate and profound” economic shock.

However former Cabinet minister Iain Duncan Smith, who is campaigning for Vote Leave, accused the Treasury of a “deeply biased” approach.

The warnings come after Bank of England governor Mark Carney said that Brexit would cause a “sharp slowing of the economy”.

Christine Lagarde, chief of the International Monetary Fund, meanwhile said the effects of Brexit would range from “pretty bad to very, very bad”.

“It's only been eight years since Britain entered the deepest recession our country has seen since the Second World War,” the Chancellor is expected to tell businesses during a visit to the South Coast.

“Every part of our country suffered. The British people have worked so hard to get our country back on track. Do we want to throw it all away?

George Osborne is warning against Brexit (Getty)

“With exactly one month to go to the referendum, the British people must ask themselves this question: can we knowingly vote for a recession?

“Does Britain really want this DIY recession? Because that's what the evidence shows we'll get if we vote to leave the EU.

“Yes, we've got improvements to make to the EU - but we know what they are and we're clear about what the future holds.

“If we remain, major British car manufacturers will go on selling hundreds of thousands of cars to Europe tariff-free.

“If we remain, British farmers will go on selling over 150,000 tonnes of beef and lamb to Europe tariff-free. That is the brighter future on offer for our country.”

The report looks at a combination of economic factors that the Treasury believes would arise within two years of an Out vote.

It assumes Britain would enter a new trade deal with the EU, a secenario under which GDP would likely be 3.6 per cent loweever.

However, full Brexit, where Britain leaves the Single Market and defaults to WTO rules with trade with the rest of Europe, would send GDP 6 per cent lower, it says.

The modelling found that under all scenarios recession would be expected “with a significant risk that the outcome could be far worse”.

A Remain vote would have “little lasting impact on the economy” as uncertainty receded, the report says.

Former work and pensinos secretary Iain Duncan Smith howver said the analysis was not “honest”.

“As George Osborne has himself admitted, the reason he created the independent forecaster, the OBR [Office for Budget Responsibility], was because by 2010 the public simply did not believe the government's own economic forecasts,” he warned.

“This Treasury document is not an honest assessment but a deeply biased view of the future and it should not be believed by anyone.”

The EU referendum will be held in a month's time on 23 June.