Brexit vote would trigger cuts, tax hikes: George Osborne

Osborne warns that leaving the EU will create a $42.4-billion hole in national finances

A vote to leave the European Union in a referendum next week would trigger tax hikes and spending cuts, Britain's finance minister warned today, after stock markets sank on the apparently rising prospect of Brexit.

George Osborne, who is campaigning to remain within the 28-member bloc, announced that schools, hospitals and the army would all have their funding slashed if the pro-Brexit side prevails.

The intervention comes as polls indicate an uptick in support for the "Leave" side days ahead of the June 23 vote.

"Quitting the EU would hit investment, hurt families and harm the British economy," he said in released remarks.

"I would have a responsibility to try to restore stability to the public finances and that would mean an emergency budget where we would have to increase taxes and cut spending."

Osborne warned that leaving the EU would create a 30-billion pounds ($42.4-billion, 37.9-billion-euro) hole in national finances.

In response, the basic rate of income tax would be raised, inheritance tax would be hiked, and the budget for services including the National Health Service (NHS) would be cut, he said.

Osborne, a member of the ruling Conservative party of Prime Minister David Cameron, was backed in his announcement by Alistair Darling, a former finance minister from the rival Labour party who managed Britain's finances during the global economic crisis.

"I am even more worried now than I was in 2008," Darling said in released remarks.

Investors have responded to the pro-Brexit momentum by selling stocks and putting their money in safe havens, with Europe's main markets down sharply and the euro hitting a 3.5-year low.

Asian markets today were broadly higher after tumbling on Brexit fears over the last week, as Tokyo warned of the impact on 1,000 Japanese companies doing business in the UK if the country left the bloc.

As the campaign enters its final stretch, a poll by ComRes showed the race on a knife edge, with support for remaining at 46% and the pro-Brexit side on 45 per cent.

This contrasts with a result from the same pollster just one month earlier in which the pro-remain side had an 11 point lead.

The day before Osborne's remarks, rivals from the remain and leave camps clashed in a debate live-streamed on YouTube.

"The whole European project is a machine for generating excessive bureaucracy and red tape," said Boris Johnson, a Conservative former London mayor and leading pro-Brexit campaigner.

"It is an economic disaster area."

Alex Salmond, the former Scottish National Party leader who is campaigning to remain, countered that the EU brought social and worker protections and allowed Britain access a trade market of 500 million people.