With the EU referendum debate reaching new levels of hysteria on either side, reporter PAUL NIZINSKYJ spoke with University of Essex economics professor Melvyn Coles about what the future might hold in the event of Brexit.

MELVYN Coles is not an unbiased source on whether Britain should leave or remain within the European Union.

Like most economists he believes that Britain would be better off remaining within the political-economic bloc but, like most people, he also believes the debate on both sides has gone well beyond the realms of credibility.

Unlike David Cameron, he does not believe Brexit will cause World War III.

Unlike George Osborne, he does not believe it would create a £30billion black hole in the nation’s finances. And, unlike European Council president Donald Tusk, he certainly does not think Brexit will trigger the collapse of western civilisation.

He just doesn’t think Britain will do quite as well economically as she does now.

“Osborne’s emergency budget was very alarmist,” he says. “I think the political debate has just gone nuts now - people are just saying crazy things like if we Brexit the economy is going to crash.

“The economy won’t crash, I just don’t think we would do as well as we would otherwise.

“But if you want an unbiased opinion, look at the (financial) markets - because those are people betting with their own money, and very large quantities of money.

“You only have to look at what happened when Boris Johnson announced he was going to support Brexit - the pound dropped by two per cent.

“His announcement clearly increased the chances of a Brexit outcome, and the pound dropped by the largest amount in seven years, because these traders believe that would be bad for the economy. If we actually voted to leave, you could potentially see something like a seven per cent drop.”

Prof Coles said he was also concerned leaving the EU could make it more difficult to attract large international employers to Britain, who he says currently take advantage of our unfettered access to the European market.

“The key argument is about the key multinationals like Nissan and Honda,” he says. The reason they’re investing big factories in Britain is because we’re part of the EU so they can export their cars, made in Britain, to the EU market with no additional costs.

“So the big question facing people who favour Brexit is, can you negotiate a free trade deal with the EU while simultaneously closing the borders to free movement, if that’s what they want to do?

“The problem they have is, because this is so crucial for Britain, the EU is going to drive a hard bargain and these people know how to play this game.

“We would be a country of 60million people negotiating a free trade agreement with a union of half a billion people. We could end up in a situation like Norway, which is outside the EU, but still has to contribute to the EU budget and are required to keep their borders open to migrant workers from the EU.”

There are crucial differences in the options available, however. Both Norway and Iceland are outside the EU but members of the European Economic Area (EEA) - otherwise known as the single market - meaning they are subject to most EU legislation even though they have no way of influencing said legislation.

Switzerland, on the other hand, instead negotiated a bespoke free trade agreement with the EU which gave it access to the single market while also exempting it from large parts of EU legislation, particularly the common agricultural and fisheries policies. However, the EU also has free trade agreements with countries like Mexico and South Korea, who only comply with EU legislation on their exports.

The kind of deal a post-Brexit Britain would negotiate would be crucial for the many small and medium sized businesses who say they are overburdened by EU legislation - if we negotiated a Norway or Iceland style agreement, nothing would change for them in that respect.

“I’m not a businessman, so I don’t know the kind of paperwork they’re involved in,” Prof Coles says, “and if they say the EU paperwork is a pain in the backside, I can believe that, and if you’re not exporting to the EU then I can understand it wouldn’t be clear that you benefit from it.

“But, if you look at it on a macro-economic scale, I believe the economy is better and people are richer for us being in the EU, so people are more likely to buy goods internally too.”