IMF warns United Kingdom of danger in case of leaving the EU

IMF warns United Kingdom of danger in case of leaving the EU

14/05/2016 source “América Economía”

The director of the International Monetary Fund (IMF), Christine Lagarde, warned that if Britain leaves the European Union (EU) as the result of the referendum of next June 23, the country could suffer a sharp decline in the stock market and in the housing prices. The evaluation, which is held each year for all IMF member countries, warns that the vote in favour in the referendum in leaving the UE could increase the volatility of financial markets and harm the national production.

In addition to producing short-term effects, the report also mentions long term problems, including changing the dominant currency market structures from London to the Eurozone, causing the London drawdown as a global financial centre.

“We analysed all scenarios. We performed our task and did not find anything positive to say about the vote for the exit of UK of the EU (the Brexit),” Lagarde said at a press conference held at the Treasury in London to present the annual IMF review of the British economy.

“The vote in favour of leaving the EU could create uncertainty regarding the nature of the economic long-term UK relationship with the EU and the rest of the world. A vote in favour of departure would precipitate a prolonged period of worsened uncertainty, which lead to market volatility affecting production. The status of London as a world financial centre could also be seen affected, as firms based in the United Kingdom could lose their ‘passport’ rights to offer financial services to the rest of the EU and a great part of business made in Euros could move, over time, to the mainland”, says the IMF report.

The IMF also predicts that the inflation rate, which currently stands at 0,5%, would raise to near 2%.

The report, however, in the case of a vote to stay in the EU, the UK’s GDP growth to recover would be in the second half of the year. In 2017, the growth would be 2,25%.