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A vote to exit the European Union in next week's referendum could leave Britain's economy more than 5 percent smaller by 2019 than if it stays in the 28-nation club, the International Monetary Fund (IMF) said.
The IMF, which has previously warned that Britain and the world economy could be hit by a so-called Brexit, on Saturday provided a detailed analysis of how a 'Leave' vote would affect the world's fifth-biggest economy.
If Britain manages to forge a Norway-style relationship with the EU, its economic output will probably be around 1.5 percent smaller by 2019 than if it stays a full member, according to the IMF's 'limited' Brexit impact scenario.
Norway is not a member of the EU but it has access to its single market in return for contributing money to the bloc and accepting its freedom of movement principle and some of its other rules and regulations.
Under the Fund's 'adverse' scenario - long and unsuccessful negotiations between London and Brussels followed by Britain having to trade with the EU under World Trade Organisation rules - the economy would be 5.5 percent smaller by 2019.
"In the short run, the uncertainty generated by navigating a complicated and untested exit process could be damaging for investment, consumption, and employment in Britain," the IMF said in its report.
The Washington-based fund is one of a number of global institutions and governments to warn of the risks of a Brexit. Britain's economy slowed ahead of the vote and the Bank of England has warned an exit could tip it into recession.
Opinion polls this week suggested the 'Leave' camp was ahead of the 'Remain' side ahead of the June 23 vote. Campaigning was suspended after the murder of British lawmaker Jo Cox on Thursday.
Britain's official Vote Leave campaign criticised the IMF's latest warnings.
"The IMF's analysis is partial," it said in a statement, adding that its forecasts have been wrong in the past."The IMF underplays the value of new free trade agreements to the British economy."
Supporters of Brexit argue Britain could strike better overseas trade deals on its own.
The IMF's forecasts were in a similar range to those from the Organisation for Economic Cooperation and Development and Britain's National Institute of Social and Economic Research, a leading think tank.
In its report, the IMF said an expected fall in sterling after an 'Out' vote might help exports but not by enough to offset the hit to demand and output.
It also took on another of the 'Out' campaigns arguments by saying there would be little room for cutting red tape after an exit from the EU because Britain was already lightly regulated.
A Brexit could shave between 0.2 percent to 0.5 percent from the rest of the EU's economic output in 2018, the IMF said. Ireland, the Netherlands and Belgium could be hit hardest because of their trade and financial linkages with Britain.
Meanwhile, ECB Governing Council member Ignazio Visco was quoted as saying on Saturday that central banks are ready to intervene if Britain votes to leave the European Union.
The prospect of the closely-contested vote, which will help determine Britain's future in trade and world affairs and also shape the EU, has rattled markets around the world.
"A British vote in favour of leaving the European Union is the risk that worries us the most at the moment," Ignazio Visco said in an interview with newspapers including Italian daily La Repubblica.
"We are keeping an eye on this risk day by day and all central banks, not just the European Central Bank, are ready to intervene with the conventional instruments they have: interest rates, repos, swaps," said Visco, who is also Bank of Italy governor.
Visco said the long negotiation process after an eventual 'Brexit' vote would certainly have financial consequences but it was difficult to predict how serious they would be.
Officials told Reuters last week the ECB would pledge to backstop markets in tandem with the Bank of England if Britons vote to leave.
Visco said the long negotiation process after an eventual 'Brexit' vote would certainly have financial consequences but it was difficult to predict how serious they would be.
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