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IMF: Brexit Hit Could Be ‘Very, Very Bad’
World Economy

IMF: Brexit Hit Could Be ‘Very, Very Bad’

A British exit from the EU could see house prices drop, the financial sector struggle and incomes depressed for years, according to a doom-laden analysis from the International Monetary Fund.
“A vote for exit would precipitate a protracted period of heightened uncertainty, leading to financial market volatility and a hit to output,” the IMF said in a report published on Friday, BBC reported.
The head of the International Monetary Fund, Christine Lagarde, has said a vote for the UK to leave the European Union could push down sterling and lead to interest rates rising sharply.
Lagarde added that the organization had concluded in its assessment that it has not seen anything positive in a possible Brexit from the EU.
She said “depending on what hypotheticals you take, it’s going to be pretty bad to very, very bad”.
But she also stressed that even if Britain was to remain in the EU “there are still vulnerabilities that continue to be needed to be addressed”.
Earlier, the IMF said Britain risks falling into a self-reinforcing cycle of weaker economic growth and lower house and share prices if voters opt to leave the EU in a June 23 referendum.
The IMF has made it clear that a vote to leave the European Union will “cost us money”, the UK chancellor has said.
George Osborne said the IMF had set out how the prospect of leaving was already having an impact on investment and hiring.
“But, the fund is also clear that this could be a mere taste of things to come if we vote to leave,” he added.
His comments come in respond to the IMF’s warning that a Brexit could lead to sharp drops in equity, increased house prices, and higher borrowing costs.
It follows the Bank of England’s warning on Thursday that Britain leaving the EU could “materially” lower UK growth.
A vote for the UK to leave the European Union could lead to sharp drops in equity, increased house prices, and higher borrowing costs, the IMF has warned.
It also said London’s status as a global financial center could be “eroded” and the contagion effects of a Brexit could spill over into regional and global markets.
UK inflation could rise well above target for some time, its report also cautioned.
A vote for exit would precipitate a protracted period of heightened uncertainty, leading to financial market volatility and a hit to output.

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