IMF says Britain leaving the EU is a significant risk

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Source: The Guardian

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A British vote to leave the EU risks causing severe economic and political damage to Europe and will spill over into to weaken an already febrile world economy, according to the International Monetary Fund.

The IMF listed a potential Brexit vote in June’s EU referendum as a key risk in its latest World Economic Outlook (WEO) triggering an immediate political reaction in the UK with Brexit campaigners accused the international institution of talking Britain down.

Maurice Obstfeld, the IMF’s chief economist, said a decision to quit the EU was a “very real” possibility and would affect economic growth even if an exit was managed smoothly. The body also cut its forecasts for global growth – and for the UK and other advanced economies.

“In the United Kingdom, the planned June referendum on European Unionmembership has already created uncertainty for investors; a Brexit could do severe regional and global damage by disrupting established trading relationships,” he said.

David Cameron tweeted in support of the IMF’s verdict: “The IMF is right – leaving the EU would pose major risks for the UK economy. We are strong, safer and better off in the European Union.”

George Osborne said it was as the “clearest independent warning of the taste of bad things to come”. The chancellor added: “Today we have a stark warning from the IMF. For the first time they’re saying that the threat of Britain leaving EU is having an impact on our economy and they cut our growth forecast as a result.

“They say were we actually to leave the EU there would be a short-term impact on stability and a long-term cost to the economy.”

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