The International Monetary Fund warned on Friday that a UK vote to leave the European Union would seriously hurt the British economy and possibly lead to a recession next year.
The IMF Report
An IMF report estimated that were Britain to leave the EU, its economy could contract by as much as 0.8 percent in 2017. In 2019, economic output could be up to 5.5 percent lower than what it would be if the country remains in the 28-member EU.
While the Washington-based IMF cautioned that the decision was for the British voters to make, IMF experts believe that the net economic effects of leaving the EU would likely be negative and substantial.
Brexit Could Lead To Recession
An exit by Britain, referred to as “Brexit,” is likely to lead to reduced trade and financial flows with other EU members, lower investment and consumer confidence and higher financial market volatility. All this could prompt major financial firms to relocate from London.
Such effects could, over time, erode London’s status as Europe’s preeminent financial centre.IMF
British voters go to the polls on 23 June.
If the UK leaves, it would no longer be obligated to make mandatory financial contributions to the EU. But those savings will likely be offset by losses triggered by a decline in trade and investment, the report said.
The IMF also said that leaving the EU will trigger a lengthy, complicated and uncertain process of negotiating new trade terms with EU members and Britain’s other trading partners, which in itself could decrease investor confidence and shake markets.
“Leaving” Could Support a Rebound in Growth
On the other hand, were Britain to remain in the EU, it would help dissipate uncertainty and could support a rebound in growth of some 1.9 percent this year, according to the IMF.
Matthew Elliot, the chief executive of Vote Leave dismissed the IMF report as its “latest intervention in the referendum debate” and said it ignores the positive aspects of leaving the EU, such as job creation and saving government funds.
If we Vote Leave we can create 300,000 jobs by doing trade deals with fast growing economies across the globe. We can stop sending the £350 million we pay Brussels every week. That is why it is safer to Vote Leave.Matthew Elliot
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