The fund warned that investors anticipating the adverse economic effects of the United Kingdom quitting the bloc could also accelerate the impact of a vote to leave, potentially entailing “sharp drops in equity and house prices, increased borrowing costs for households and businesses, and even a sudden stop of investment inflows into key sectors such as commercial real estate and finance”.
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In a new research paper, the International Monetary Fund said that tackling corruption is critical for the achievement of macroeconomic stability, one of the institution’s core mandates. We’re doing it because it’s a significant downside risk.
Christine Largarde, managing director of the global finance body, said a sharp rise in interest rates were among the negative impacts that could result from the United Kingdom leaving the 28-member bloc in the referendum on 23 June.
The report said following a Brexit, it could take Britain years to renegotiate trade deals with the European Union and other world economies, hitting investment and weighing heavily on economic sentiment. She said, it undermines trust in government and erodes the ethical standards of private citizens.
Finger said in a statement that growth remains robust and is expected to reach 4.5 percent this fiscal year despite a weak cotton harvest, declining exports, and a more challenging external environment.
The IMF has previously warned of the risks of Brexit, but it has delivered a significantly darker forecast in this report. “Heck no”, she told reporters when asked.
The IMF added that Brexit would spark fresh markets volatility and a lengthy period of uncertainty.
Such rights are critical for Britain, because so much of its economy is based on services. A day earlier, Mr Osborne said the central bank and the Treasury were putting in place contingency plans to manage potential shocks in financial markets if Britons vote to leave.
The IMF managing director insisted there was no positive scenario for United Kingdom economic performance after Brexit when other trade models were analysed, such as Norway and Switzerland, or reverting to World Trade Organisation rules.
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“But, the fund are also clear that this could be a mere taste of things to come if we vote to leave”, he added.
