The International Monetary Fund’s Managing Director, Christine Lagarde, has warned strongly against a British exit from the European Union. She said that such a move would give rise to a protracted period of uncertainty, financial market volatility and a damaged economy.
Over the past two weeks, an IMF team has been assessing the strength of the country’s economy along with the potential risks faced by other countries, should a Brexit occur. The IMF stated that, following a decision to exit the European Union, the UK would need to negotiate the terms of its withdrawal and a new relationship with the EU. This process and its eventual outcome could remain unresolved for years, “weighing heavily on investment and economic sentiment during the interim and depressing output.” Furthermore, it is likely that volatility in key financial markets would rise as markets adjust to unprecedented circumstances. Ms Lagarde sided with Mark Carney, the Bank of England governor, who argued that the country’s economy risked descending into recession after a Leave vote.
The IMF will delay the release of its full estimates regarding the ramifications of a Leave vote until its report has been discussed at the fund’s board meeting on June 15th in Washington. This will provide the ‘Britain Stronger in Europe’ campaign with some welcome ammunition ahead of the vote, especially considering the ban on UK officials discussing the consequences of leaving the EU within the 28 days preceding the vote. Ms Lagarde was quick to dismiss the idea that the timing and content of the report were designed to aid the UK government in its efforts to ensure the UK remains in the EU. When asked whether the UK Treasury had provided any input into the IMF’s conclusion, Ms Lagarde simply responded “heck, no”.
Refusing to give specific numbers now, Ms Lagarde said “What I can tell you for sure is that (the consequences of Brexit) is going to be a negative number, for sure”.