£1 coin

The UK's economy could be 6% smaller if the public votes to leave the European Union - the equivalent of £4,300 per household every year - the Treasury has warned.

The 200-page report claims exports will suffer as a result of various trade barriers, and investment within the UK and from abroad would also suffer.

Many businesses leaders have already suggested that they may halt investment in the UK, or even move their operations elsewhere in the event of a Brexit.

The Treasury's report, published by the Chancellor George Osborne, considers three possible post-Brexit scenarios. First, it looks at joining the European Economic Area (EEA), meaning a deal similar to Norway's. Second, it considers a bilateral trade agreement with the EU, similar to a deal currently being negotiated with Canada. And finally, the UK could enter trade agreements with the World Trade Organisation (WTO), similar to Russia and Brazil.

It is understood that the 6% figure highlighted by The Treasury refers to a Canada-style trade agreement with the EU; considered to be the 'middle option'. The WTO scenario would likely have the worst effect on the UK economy, while entering the EEA would have the least negative effect.

Writing in The Times, the Chancellor said: "Put simply‎: over many years, are you better off or worse off if we leave the EU?

"The answer is: Britain would be worse off, permanently so, and to the tune of £4,300 a year for every household.

"It is a well-established doctrine of economic thought that greater openness and interconnectedness boosts the productive potential of our economy.

"That's because being an open economy increases competition between our companies, making them more efficient in the face of consumer choice, and creates incentives for business to innovate and to adopt new technologies."

The Vote Leave campaign labelled the report as "erroneous", but the Treasury insisted it was a "sober assessment" of the economic impact of a Brexit.

The EU referendum takes place on 23 June.