The International Monetary Fund (IMF) chief has said a vote by the UK to leave the European Union would have
"pretty bad, to very, very bad" consequences.
Christine Lagarde
said she had "not seen anything that's positive" about Brexit and warned
that it could "lead to a technical recession".
She echoed similar comments made on Thursday by Bank of England governor Mark Carney.
Vote Leave said the IMF had been wrong in the past and were "wrong now".
The IMF said in a report on the UK economy that a leave vote could have a "negative and substantial effect". It has previously said that such an outcome could lead to "severe regional and global damage".
Ms
Lagarde said the Fund had a duty to assess the risks of Brexit. It has a
mandate to oversee the international monetary and financial system.
Brexit
was not just a domestic issue but an international one as well, she
told a briefing at the Treasury attended by the Chancellor, George
Osborne."I don't think that in the last six months I have visited a country anywhere in the world where I have
'Heck no!'
Trade and economy
The debate
- About half of UK trade is conducted with the EU
- The EU single market allows the free movement of goods, services, capital and workers
- Trade negotiations with other parts of the world are conducted by the EU, not individual member states
Leave
- UK companies would be freed from the burden of EU regulation
- Trade with EU countries would continue because we import more from them than we export to them
- Britain would be able to negotiate its own trade deals with other countries
Remain
- Brexit would cause an economic shock and growth would be slower
- As a share of exports Britain is more dependent on the rest of the EU than they are on us
- The UK would still have to apply EU rules to retain access to the single market
Asked if the Treasury had had any input into the IMF's conclusions,
Ms Lagarde responded: "Heck no! If you are suggesting that, you don't
know the IMF."
In its report, the IMF said that a Brexit vote
would result in a "protracted period of heightened uncertainty" and
could result in a sharp rise in interest rates.
That would cause
volatility on financial markets and economic output to decline and could
also erode London's status as a global financial centre, it added.
Priti
Patel MP, who is backing the leave campaign, said the IMF was "wrong
then and they are wrong now. It appears the Chancellor is cashing in
favours to Ms Lagarde in order to encourage the IMF to bully the British
people."
The Fund said it expected growth to fall below 2% for
the full year in 2016 before returning to an average of 2.25% over the
medium term.
However, the IMF said that this "broadly positive"
forecast was subject to notable risks, the biggest of which was the EU
referendum, but also the low level of household savings, high levels of
household debt, a wide current account deficit and concerns that
productivity growth will not rise significantly.
Former Chancellor, Lord Lamont, added: 'This daily avalanche of
institutional propaganda is becoming ludicrous and pitiful. Important
institutions are being politicised and used to make blood-curdling
forecasts.
"There are plenty of respected individual economists,
plenty of respected professional investors, and plenty of entrepreneurs
who take a very different view from Christine Lagarde and who have
probably been better at foreseeing the future than the IMF."
Britain
Stronger in Europe chairman Lord Rose said: "This is yet another
economic expert that agrees Britain is stronger in Europe, adding to the
comments of the Bank of England."
Former Treasury minister Lord
Myners, who backs staying in the EU, added: "Every major independent
economic institution, from the Bank of England to the IMF, has made it
clear that leaving the EU would damage the UK economy. This is yet more
evidence that leaving is a risk we cannot afford to take."
Concerns about a possible Brexit may have affected UK markets in recent months, according to the IMF.
It pointed to a 40% decline in the number of commercial real estate transactions in the first three months of the year.
Deciding
whether to remain in the EU was a choice for voters to make, the IMF
said, adding that "their decisions will reflect both economic and
non-economic factors".
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