A vote to leave the European Union could force the government to make severe spending cuts to cover a "black hole" of 30 billion pounds (44 billion dollars) in the budget, Chancellor of the Exchequer George Osborne warned on Wednesday.
The government could be forced to raise taxes and cut spending on the national health service in an emergency budget, Osborne said in a letter published in The Times and co-signed by former Labour chancellor Alistair Darling.
Voting for a British EU exit, or Brexit, would cause a "profound economic shock that would hit the economy and could tip Britain back into recession," Osborne and Darling wrote ahead of a joint speech later Wednesday.
Prime Minister David Cameron backed Osborne's claims in parliament, saying "there is a consequence [of a Brexit] for public finances if our economy is doing less well." He added that he expected the pound to fall and the cost of living to rise after a Brexit.
But eurosceptics from Osborne and Cameron's Conservative Party said the predicted post-Brexit tax hikes and budget cuts would undermine the government's legitimacy.
It was "incredible that the chancellor could seriously be threatening to renege on so many manifesto pledges," 57 Conservative members of parliament said in a letter circulated by Vote Leave.
Nigel Farage, leader of the anti-EU UK Independence Party, urged voters to "ignore Mr Osborne's fantasy budget." "Post-Brexit he won't be the chancellor for very long," Farage said on Twitter.
The looming vote was already having economic repercussions worldwide.
In Washington, US Federal Reserve chief Janet Yellen said that a possible Brexit was discussed in a meeting of the central bank's monetary policy committee and it factored in to the Fed's decision to leave its near-record low interest rate unchanged despite solid economic growth in the United States.
A British departure from the EU "could have consequences for economic and financial conditions in global financial markets. If it does so, it could have consequences, in turn, for the US economic outlook," Yellen said.
She said that "international uncertainties loom large" and that the outcome of the referendum "will factor into future decisions."
Vote Leave on Wednesday published a plan for "immediate action to take back control from the EU" if Britain votes to leave.
"We will need a carefully managed negotiation process and some major legislative changes before 2020, including taking real steps to limit immigration, to abolish VAT on fuel and tampons, and to end the situation where an international court can tell us who we can and cannot deport," Conservative minister Chris Grayling said in a Vote Leave statement.
But the case to Remain, led by Osborne and Cameron, was boosted by an Economist Intelligence Unit (EIU) report warning that "a decision to leave would have profound consequences for the future of both the UK and the EU."
"This economic pain would be coupled with political instability, as significant doubts emerge about government cohesion [in Britain]," the EIU said.
Recent polls have suggested support for Leave has moved ahead of the backing for Remain in the June 23 referendum.