12 April 2016

The Guardian: IMF says Britain leaving the EU is a significant risk

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 Union membership has already created uncertainty for investors; a Brexit could do severe regional and global damage by disrupting established trading relationships,” he said. [...]

The IMF said that after growing 2.2% in 2015, the UK economy is now expected to expand by only 1.9% in 2016, down from a forecast of 2.2% made by the Fund in January. That compares with 2.0% growth predicted for 2016 by the government’s independent forecasters, the Office for Budget Responsibility. [...]

The Washington-based Fund said economic growth was also threatened by a host of other factors, including “the tragedy of large-scale refugee inflows” to Europe, a potential reappearance of financial market turmoil, China’s difficult economic rebalancing and growing income inequality.

It had already warned about the economic impact of uncertainty around June’s referendum but this WEO goes further: “Negotiations on post-exit arrangements would likely be protracted, resulting in an extended period of heightened uncertainty that could weigh heavily on confidence and investment, all the while increasing financial market volatility.”

Full article on The Guardian

Full IMF's World Economic Outlook

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