Leaving EU could lead to recession in UK: Bank of England

The Bank of England has issued an unprecedented warning over next month’s EU referendum, saying that Britain could fall into recession in the aftermath of a vote to withdraw from the European Union.

Governor Mark Carney, speaking to reporters in London on Thursday, warned Brexit – Britain’s exit -- could sharply depress the pound, fuel inflation and raise unemployment, The Guardian reported.

Carney added that all this would leave the Bank of England with choosing from difficult options of whether to cut, hold or raise interest rates to counter opposing forces.

He said if British citizens voted to leave the EU, there would be a range of possible scenarios for the economy and these “could possibly include a technical recession.”

“A vote to leave the EU could have material economic effects – on the exchange rate, on demand and on the economy’s supply potential – that could affect the appropriate setting of monetary policy,” Carney said.

Last week, the head of the British Treasury, George Osborne, said if UK voters decided to leave the EU , it would be "catastrophic" for jobs and homeowners would face a "significant hit" from lower house prices.

"This isn't just a big question about who we are as a country. This goes to the heart of people's financial security," Osborne, the Chancellor of the Exchequer, said in an interview on ITV television May 8.

"I am pretty clear that there will be a significant hit to the value of people's homes and to the cost of mortgages. That is one example of the kind of impact, economic impact, that we get from leaving the EU," he said.

Osborne has led the UK government's argument that leaving the EU would cost people money.

Opinion polls have indicated that UK voters believe staying in the EU would be best for Britain's economy, but that support for leaving and remaining still remains at a virtual tie.

The economy and the impact of a possible Brexit on jobs, wages and trade are a key battleground for both the "In" and "Out" campaigns before Britons vote on June 23 on whether to stay in the 28-member bloc.

The "Out" campaign says the British economy would flourish over the long term outside the EU as Britain would be able to strike its own trade deals, spend its EU budget contributions at home and scale back rules and regulations.

The “In” campaign, those in favor of remaining in the bloc, argue that leaving it would risk the UK's prosperity, diminish its influence over world affairs, and result in trade barriers between the UK and the EU.

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