Brexit Uncertainty Weighs on Growth Outlook: IMF

Brexit Uncertainty Weighs on Growth Outlook: IMF
Wed Feb 24, 2016 19:59:32

The International Monetary Fund says uncertainty over Britain's membership in the EU risks negatively affecting the country's growth outlook.

In its latest outlook for Britain, IMF said the country’s economy was expected to grow by 2.2 percent this year and next, matching official gross domestic product for 2015. But it warned that "uncertainty associated with the outcome of the forthcoming referendum on EU membership could also weigh on the outlook" along with various other factors including "potential shocks to global growth and asset prices."

The UK is preparing for a June 23 referendum on its EU future. British Prime Minister David Cameron has warned that the country's departure from the EU would threaten its economic and national security.

"Quantifying how a decision to leave the EU would affect the economy is difficult, given that the terms of staying in the EU are still being negotiated and the nature of post-exit relations with the EU is unknown. However, analysts have raised concerns that the exit debate could bring a period of uncertainty that could weigh on investment," the IMF said.

Earlier, hundreds of managers of top British companies urged voters to keep Britain in the EU, warning that an exit from the bloc would threaten jobs.

On the other hand, British Prime Minister David Cameron warned on Monday that a vote to leave the EU would risk Britain's economic and national security, as uncertainty over the outcome of the June referendum sent the pound plunging. In a speech to the House of Commons, the Conservative leader launched a barely-veiled attack on London mayor Boris Johnson, his long-term rival who has come out for a Brexit, accusing him of taking the position for political gain, AFP reported.

Britain's currency has been hit in recent times also by increased expectations that the Bank of England may wait until at least next year to raise interest rates amid weakening growth at home and abroad, according to analysts.

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