Brexit could trigger economic recession in UK: IMF
Britain’s possible exit from the European Union (EU) would plunge the country into a recession, the International Monetary Fund (IMF) says, days before the June 23 EU referendum.
In its annual British economic outlook, published Saturday, the IMF called Brexit the “largest near-term risk” to the country’s economy, warning that leaving the EU would cause “negative and substantial” impacts.
The worst case scenario for the UK, according to the IMF, would include a significant surge in inflation combined with up to 5.6 percent decline in 2019 economic growth.
The GDP would also take a hit after Brexit, facing a 0.8 percent drop in 2017, which an IMF official described as a “recession.”
The housing sector and other major markets in Britain would face volatility and less investment as a result of a long period of uncertainty.
The new report echoed IMF’s last month warnings of a stock market crash and a steep fall in house prices in the event of Brexit.
Trade negotiations would also drag on for years because the UK is likely to hit more “trade barriers” after switching to World Trade Organization (WTO) rules.
The IMF report comes days after similar cautions by Chancellor of the Exchequer George Osborne, who proposed significant spending cuts and tax hikes for a post-Brexit UK.
Leave campaigners, who believe leaving the bloc would actually benefit the economy, were angered by the IMF report.
“The IMF has chosen to ignore the positive benefits of leaving the EU and instead focused only on the supposed negatives,” said Matthew Elliot, chief executive of Vote Leave. “If we vote Leave we can create 300,000 jobs by doing trade deals with fast growing economies across the globe.”
Campaign group Economists for Brexit also rejected the report’s predictions, saying it was “based on flawed EU-centric models.”
Using WTO rules, the group argued, would be the Brexit’s best outcome, setting the county free “from both Single Market regulations and from free EU movement of people.”
The report was scheduled for release on Friday, but its publication was delayed following the murder of Labour MP Jo Cox on Thursday, which halted Brexit campaigning on both sides.
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