In its long-term analysis report, the Treasury found that under all three scenarios – remaining in the European Economic Area (EEA), bilateral trade agreements and World Trade Organisation (WTO) rules – GDP would be lower compared with remaining in the EU.

Its analysis indicated that the UK would be less open and therefore trade and foreign direct investment would fall, ultimately lowering productivity and GDP. In the central estimate for the EEA scenario, GDP is 3.8% lower, while the figure for the bilateral trade agreement is 6.2%. The largest GDP reduction is found in the WTO scenario with GDP falling 7.5% in the central estimate.

But while the Treasury’s overall predictions were more negative than those of other institutions, the NAO found that could in part be attributed to its policy-neutral approach, which assumed the government would not alter policy in response to leaving the EU.

The NAO found the Treasury selected what it considered to be a cautious range of estimates towards the lower end of the spectrum of elasticities in the external analysis, using an elasticity range of between 0.2 and 0.3, implying that a 10% reduction in trade would cause an assumed productivity decrease of between 2% and 3%.

The Treasury’s predictions were heavily criticised by Leave campaigners in the run-up to the 23 June referendum for perceived negativity over the prospect of the UK’s exit from the EU.

Among the Treasury’s findings prior to the referendum was that households would be worse off by £4,300 a year, while tax receipts could dip by up to £45bn.

When asked about the NAO's report, the Treasury cited the Chancellor's Mansion House speech: 'The prime minister’s Lancaster House speech in January set out clearly the arrangements that the UK would like to agree, built around a comprehensive trade agreement in the context of a deep and special partnership that goes much wider than trade.' 

The NAO’s report can be read here.