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02:06 BST, June 19, 2016The UK economy would be 5 percent smaller by 2019 if it leaves the EU than if it stays, according to a report by the International Monetary Fund.
This isn’t the first time the IMF has warned of the economic impact a vote to leave would have on Britain’s economy, but on Saturday it published a very detailed analysis on the economic consequences of a vote to “Leave”.
Christine Lagarde, believes EU membership has made the U.K. a richer economy, but also a “more diverse, more exciting, and more creative country.”
Even if the country manages to strike a trade deal with Europe similar to the one Norway the UK GDP is forecast to be 1.5 percent smaller than if it were to remain a full member of the trading bloc.
“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 IMF’s analysis is partial,” it said in a statement. “The IMF underplays the value of new free trade agreements to the British economy.”
Meanwhile, Christine Lagarde, Managing Director of the International Monetary Fund, said in speech:
“I have always admired the United Kingdom for it openness to other nationalities and foreign cultures, and I find it hard to believe that attitudes have changed in such a short time.
“But this is for British voters to decide, and their decision clearly depends on many factors. We have already been on record that the economic risks of leaving are firmly to the downside.”
Lagarde said that in her view there is “a clear case” as to how the U.K. has benefited and will continue to benefit from its EU membership.
“First, there are jobs and income gains that have come from increased trade within the EU. This is not trade that would have happened anyway, or trade that has simply been diverted away from other parts of the world. The formation of the EU and the single market has been instrumental in generating more trade than would otherwise have been the case.
“And with more trade has come more investment, as the U.K. has become integrated into European supply chains—such as in the aerospace industry, and in factories producing cars for the whole European market. Increased trade has also raised productivity and incomes by increasing the scope for economies of scale in production and efficient specialization.
“Second, and more profoundly, being part of the EU has greatly aided the transformation of the U.K. into a dynamic and vibrant economy. The U.K. has benefited from the many contributions of talented and hard-working migrants from all over the world, including the EU, while providing record-high levels of employment for all its residents.”