UK Politics

EU exit campaigners warn of eurozone 'ticking time bomb'

Labour MP Gisela Stuart
Image caption Gisela Stuart is one of the most prominent Labour figures in the Leave campaign

The eurozone is a "ticking time bomb" that will harm the UK if it stays in the EU, Leave campaigners are warning.

Gisela Stuart, the Labour MP who chairs Vote Leave, said a "daunting fiscal and demographic crunch" will require tax rises of 18% across the euro area.

Her speech came ahead of the Electoral Commission announcing Vote Leave as the official Out campaign.

Backers of EU exit have been boosted by news that a group of Tory donors is considering giving them up to £5m.

Britain Stronger In Europe has been designated as the lead campaign for the In side.

It and Vote Leave will each have a spending limit of £7m while other groups taking part in the campaign are limited to £700,000 expenditure.

'Mule-like refusal'

In her speech, Ms Stuart cited research by Vote Leave which the group says shows spending on public pensions across the eurozone is estimated to rise by 2.1% of GDP by 2020, and the cost of debt interest payments to go up from 1.8% to 6.9% of GDP over the next 35 years.

It suggests that tax rises of 17.6% will be needed to plug the gap and that the UK, while outside the euro, will "inevitably" be affected.

"The priorities of the eurozone will gradually and inevitably take over Brussels institutions," Ms Stuart said. "If we don't want to be part of this we must vote Leave."

The government has said it has negotiated safeguards to ensure it will not have to contribute to any future bailouts across the eurozone while the International Monetary Fund warned on Tuesday that a UK exit from the EU could cause "severe economic damage".

The IMF - one of the main pillars of the global economic order - said a so-called Brexit would disrupt established trading relationships and cause "major challenges" for the UK and the rest of Europe.

But Ms Stuart said that her experience, as a former Labour minister, in negotiating the EU's Lisbon Treaty in 2009 exposed her to the EU's "mule-like refusal to listen to democratic concerns" or accept any "deviation from the orthodoxy of political integration".

Democratic accountability and economic competitiveness were "downgraded", said, "in case they become a diversion from the European project". "I call it integration at whatever the cost or consequences," she added.

'Scaremongering'

Grassroots Out - another group campaigning for EU exit - has said it was "delighted" that the Midlands Industrial Council, a wealthy group of Conservative Party donors - are offering to help bankroll the Leave campaign.

The Council, which does not publish its accounts or the names of its supporters, have been one of the Tories' main financial backers, giving up to £2m to the party a year in recent times.

David Wall, its secretary who sits on the board of Grassroots Out, told the Daily Telegraph that the organisation was "incandescent with rage" about the government's decision to spend £9m on sending pro-EU leaflets to every UK household.

He told the paper that it could potentially give up to £5m to the campaign to leave the EU over the next two months.

Britain Stronger in Europe - the official In campaign - has claimed the support of more than 35 FTSE 100 company bosses.

Employers' group the CBI is highlighting the links between UK and European business, arguing EU membership has helped attract £377bn of investment from France, Germany, Spain and the Netherlands alone.

"European businesses are clear that 40 years' worth of collaboration through the EU is critical to attracting investment to the UK - let's not turn our back on our closest partners," said the CBI's director general Carolyn Fairbairn.

Meanwhile, the EEF manufacturers' organisation is warning that the UK economy is "heavily reliant" on migrant labour, with EU nationals accounting for 10% of the workforce in the industrial sector "without whom it would not function".

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