How credible is the Treasury's forecast that Brexit would make us between £2600 and £5200 a year poorer?

The Treasury has forecast that leaving the EU would leave British householders with less money. Credit: PA

The Treasury's forecast that leaving the EU would leave British households quite a lot poorer on average - between £2600 a year and £5200 a year worse off in 15 years - is based on a simple idea that few economists would dispute.

Which is that, all other things being equal, trade and investment falls when barriers to trade and costs of trade increase, and that in turn has a negative knock-on to productivity, or output per worker.

Less trade makes us poorer is an idea that hasn't been disputed since Adam Smith was knocking around these parts 240 years ago.

And even if you believe that the rest of the EU would make our exit as painless and friendly as possible, as many who want to leave the EU do, it is inconceivable that EU governments would offer us unchanged single market access, with no budget contributions and insulation from all future Brussels legislation.

There are fears about the knock-on effect of Britain leaving the EU Credit: Reuters

To do so would be to publicly announce the end of the EU - because which other country would rationally wish to continue paying their subs to the EU club, if we were granted all club privileges for free and forever?

So just dismiss the idea that there will be no reduction to trade, investment and growth from leaving.

The legitimate debating point is the quantum of that loss.

And one area where the Treasury will be vulnerable to criticism is that it has not built into its economic model any benefit from British governments taking advantage of the new independence from Brussels to reduce the regulatory burden on business.

Does that invalidate all its calculations?

Probably not.

Will a 'Brexit' affect British trading in the European Union? Credit: PA

First it is incredibly difficult to quantify the impact on growth of slightly nebulous reductions in red tape relating to product standards and working conditions - which a future Labour government might not want in any case.

Second it would be naive to assume that whatever access we achieve to the single market will free us from any need to follow Brussels' product and market standards for our goods and services.

For example, Canada and Norway both have to adopt huge amounts of Brussels rules for their respective trade access deals

Another possible flaw in the Treasury calculations is that it is based on the forecasts for population growth and migration made by the Office for National Statistics, and does not assume any fall in migration as a result of quitting the EU.

The point is that if Brexit led to lower migration (which is disputable), our economic cake would be shared between fewer people and in that sense those of us who live here would be relatively richer.

But a smaller population and fewer productive people coming from abroad would also mean slower growth in the cake. And that would mean we would be relatively poorer.

In other words, the migration assumption made by the Treasury probably does not distort its conclusion in any serious way.

So what about the idea that the Treasury is being too pessimistic about the kind of spur our firms would get to trade with faster growing parts of the world, in Asia, Africa and the Americas?

Well maybe Boris Johnson is right that we would triumph in the face of economic adversity.

Mayor of London Boris Johnson is campaigning for Britain to leave.

But "what doesn't kill you, makes you stronger" is not a precept willingly adopted even by the most confident of entrepreneurs.

Two other points.

These predictions - including that the lower growth would lead to proportionately smaller tax revenues, which would more than offset the termination of our EU budget contributions by £36bn a year by 2030 - do not assume any major shock to the economy from the process of leaving.

A separate Treasury paper will assess the size and probability of such a shock - which many in the City could be very large.

Also, anyone who has doubts about the Treasury's impartiality - reasonable doubts, as it happens - needs to explain why most economists would agree with the direction of its predictions.

What the well-resourced Leave campaign needs to do, if it really wants to challenge the idea that Brexit makes us poorer, is to commission its own forecasts from credible independent economists.

If it fails to do so, voters will draw their own conclusions.