IMF says consequences of Brexit range from 'pretty bad to very, very bad'
A vote to leave the European Union would cause severe damage to the UK economy and leave British people much poorer, the International Monetary Fund said today.
In a hard-hitting report on the UK economy, the highly-respected international body also warned of "sharp drops" in house prices and higher interest rates, while London's status as a global financial centre "could also be eroded".
It said: "A vote for exit would precipitate a protracted period of heightened uncertainty, leading to financial market volatility and a hit to output."
Attempts to negotiate trade deals with more than 120 countries around the world "could well remain unresolved for years, weighing heavily on investment and economic sentiment," the IMF said.
It added: "The long-run effects on UK output and incomes would also likely be negative and substantial."
By contrast, the report said that a Remain vote would see the UK economy "rebound during the second half of the year".
Speaking at a press conference in the Treasury this morning, IMF managing director Christine Lagarde said experts were united in their belief that Brexit would be bad for the global economy.
She said: "We haven't seen anything that is positive. It has always been on the negative side. Depending on what hypotheticals you take it's going to be pretty bad to very, very bad."
Ms Lagarde also said she agreed with Bank of England governor Mark Carney that the UK will probably enter recession if there is a Leave vote on 23 June.
"A technical recession is one of the probabilities of the downside risk scenarios in the case of a Leave vote," she said.
"It's a combination of the current situation and the potential immediate outcome of a No vote and the level of uncertainty that would certainly lead to serious disruption."
Appearing alongside Ms Lagarde at this morning's event, George Osborne said voters should take heed of the IMF's warnings ahead of the referendum.
He said: "These are the facts that British families need to hear. If we vote to leave, British families will be poorer and Britain will be poorer."
In a direct attack on the Vote Leave campaign - which includes many of his senior Tory colleagues - Mr Osborne said the IMF had "put to rest the fallacy that has been peddled by those who say we'll have more money to put into public services" after Brexit.
He said: "It would cost more than we would save from not giving money to the EU. We would have less to spend on public services."