The International Monetary Fund (IMF) warned that a Brexit could result in “severe regional and global damage”.
In its most recent outlook the IMF said that established trading relationships would be disrupted if the UK votes to leaves the European Union, creating major challenges for both Britain and the Eurozone trading bloc.
A UK exit from the EU would “disrupt and reduce mutual trade and financial flows, curtailing key benefits from economic co-operation and integration, such as those resulting from economies of scale and efficient specialization,” the IMF said in its report.
In addition to stressing the risks of a Brexit, the IMF also cut its UK growth forecast for 2016 down from its January estimate of 2.2% to 1.9%. For 2017, the IMF forecasts growth in the UK of 2.2% – unchanged from its January estimate.
Chancellor George Osborne said the IMF’s warning about a Brexit are “stark” and stressed the economic impact a vote to leave would have on the UK economy.
Mr Osborne said: “While Britain remains one of the fastest-growing advanced economies in the world, the IMF’s warnings about our exit from the EU are stark. For the first time, we’re seeing the direct impact on our economy of the risks of leaving the EU.”
The Chancellor added: “If the British economy is hit by the mere risk of leaving the EU, can you imagine the hit to people’s income and jobs if we did actually leave?
“The IMF has given us the clearest independent warning of the taste of bad things to come if Britain leaves the EU.”
Prime Minister David Cameron made a similar comment about the report. He said : “The IMF is right – leaving the EU would pose major risks for the UK economy. We are stronger, safer and better off in the European Union.”
Meanwhile, John McDonnell, Shadow Chancellor of the Exchequer, said: “This is another major downgrading of growth forecasts for this already downgraded Chancellor.
“It should act as a signal that George Osborne needs to change course and that Tory backbenchers who wildly scream for Brexit should think again. As these figures clearly suggest, it’s the uncertainty facing the UK from the risk of leaving the EU coupled with a Chancellor who can’t even meet his own targets that has led to such a concerning announcement.”
David Miliband, the Labour party’s former foreign secretary, said in a speech in London:
“This is a stark warning that should ring loudly in the ears of families and businesses across the country.
“There is a storm on our horizon. We can hear the thunder if we are willing to listen. But it is in our power to protect ourselves.”