Brexiters are a fickle bunch.

First, those campaigning for Britain to quit the European Union are outraged at the International Monetary Fund’s suggestion that it will deliver a “severe regional and global shock.” Then their leader, Michael Gove, a senior government minister, suggests in a speech Tuesday that his goal is to “liberate” countries like Spain, Portugal and Greece from the euro by showing “it is possible to regain democratic control of your country and currency.”

One week, they want to leave the EU to pursue ambitious free trade deals with developing countries such as China; the next—after the U.K.’s largest steel works is threatened with closure—they want to quit the EU to slap punitive tariffs on China.

For months, they can’t decide whether the model for the U.K.’s post-Brexit trading relationship with the EU should be Switzerland, Norway, Canada, or Brazil. Now, Mr. Gove says his model is Albania.

But pro-Brexit campaigners are consistent about one thing: They always insist that a Brexit won’t hurt the U.K. economy. Whenever any new analysis suggests otherwise, it is dismissed as scaremongering, part of “Project Fear,” a global conspiracy to spook Britons into voting to stay in the EU.

That was the campaign’s inevitable response to the Treasury’s rigorous 200-page assessment of the long-term impact on the U.K. economy published this week. It concluded that the economy would be between 3.8% and 7.5% smaller than it might otherwise be under various alternative EU trading relationships. Yet, the reality is that the Treasury’s analysis most likely substantially understates the possible impact of a U.K. exit.

The Treasury merely tried to model the long-term impact of three different possible trading relationships, assuming the EU remains the same as it is today. What the Treasury didn’t do was try to model the impact on the European economy should Mr. Gove succeed in his ambition to pull apart the European project.

One thing that has become clear after seven years of the euro crisis is that the cost of breaking up the euro is formidable—so formidable that even this week, Greece’s left-wing government has been discussing the tough new austerity measures needed to keep Greece in the common currency.

Polls currently show that a majority of voters in the countries that Mr. Gove wants to liberate support the euro and EU membership, reflecting well-founded fears of the massive wealth destruction and inevitable national bankruptcies that would follow the currency’s collapse. If Mr. Gove is right about contagion, then the Treasury’s steady-state assumptions woefully underestimate long-term Brexit costs.

Meanwhile, the Treasury hasn’t tried to model the short-term impact of Brexit on the U.K. economy, which it will address in a future report. These costs could be substantial, given the impact of what is likely to be prolonged uncertainty over future trading relationships, not least because the negotiations could prove a lot more difficult than the Brexiters claim.

After all, Europe’s leaders are unlikely to welcome Mr. Gove’s offer to liberate them; their priority instead will be to protect the EU. At the same time, their voters will expect them to stand up for their national interests by driving a hard bargain.

It took four years for the EU and the U.S. to agree on new rules for central counterparties, even though both sides wanted a quick deal, Britain’s European Commissioner Jonathan Hill said in a speech earlier this month. “If Britain chooses to become a competitor rather than a partner, why wouldn’t there be a wish to seek a competitive advantage in the new relationship?”

Uncertainty is always bad for business. “Companies will delay/cancel investment and employment while they wait to hear what access the U.K. will have to the European Single Market,” notes Absolute Strategy Research in a recent report. “Sectors that require regulatory certainty (e.g. the financial services sector) could find themselves trapped in a regulatory purdah.”

At the same time, further steep falls in sterling look inevitable. The U.K. last month ran a current-account deficit of 7% of GDP, the largest since World War II, while the country has run up cumulative net overseas borrowing of £600 billion (about $861 billion) over the last decade, notes ASR.

The pound may have to fall a long way before international investors are willing to roll over those debts, while investors are likely to seek a risk premium on U.K. assets, making it likely that the cost of funding will rise, feeding through to other borrowing costs, which will further squeeze the economy—a point underlined by Bank of England Governor Mark Carney in evidence to the House of Lords on Tuesday.

Could the U.K. expect to derive some compensatory boost from a weaker pound to offset higher funding costs and canceled investment? That seems improbable since, unlike in 1992, when the pound was ejected from the European Exchange Rate Mechanism, this devaluation would be the result of rising risks premiums rather than the stimulus of looser monetary policy.

In any case, the U.K.’s more recent experience of devaluation during the 2008 financial crisis suggests that in today’s world of global supply chains, exchange-rate fluctuations are a two-way street. Besides, 44% of the U.K.’s exports go to the rest of the EU, whose own demand for British goods is sure to suffer as their own growth stumbles—particularly if it becomes clear that the whole of Europe really is about to be “liberated” by Mr. Gove.

Project Fear? Project not yet fearful enough.