IMF fires Brexit warning

19 Jun 2016


LONDON: The IMF has warned Brexit could deal the British economy a “negative and substantial” blow as Vladimir Putin suggested David Cameron was trying to “blackmail” Europe with the EU referendum.

Meanwhile The Times newspaper came out Saturday in favour of Britain staying in the European Union, five days ahead of the vote on whether the UK should stay in the bloc or leave.

The pound rallied as investors leaned towards a Remain outcome from Thursday’s closely-contested referendum.

Campaigning remains suspended Saturday as a mark of respect for murdered lawmaker Jo Cox.

Cox, who was backing the Remain campaign, was slain in her northern English constituency on Thursday.

Murder suspect Thomas Mair has been charged and was to appear in a London court on Saturday.

IMF WARNS OF CONTAGION: With less than a week until the referendum, the International Monetary Fund warned that a so-called Brexit would harm the British economy while “contagion effects” could hit markets worldwide.

In the worst-case scenario, the UK economy would sink into recession next year and overall economic output would be 5.6 per cent lower than otherwise forecast by 2019, with unemployment rising back above six per cent, it said Friday.

“While there is much uncertainty about the precise economic effects of an exit from the EU, they are likely negative and substantial,” the Washington-based global crisis lender revealed in its annual British economic check-up.

“An exit would precipitate a protracted period of heightened uncertainty that could weigh on confidence and investment and increase financial market volatility.” In addition, “contagion effects could result in spillovers to regional and global markets, although the primary impact would be felt domestically”.

While in a “limited impact” scenario the IMF said the economy would only lose 1.4pc from the current outlook by 2019, the report gave one of the starkest pictures yet of the impact of Brexit.

PUTIN WADES IN: Meanwhile Russian President Vladimir Putin suggested British Prime Minister David Cameron had called the referendum to “blackmail” and “scare” Europe.

“Why has he set up this referendum? To blackmail Europe? Or to scare it? What is the purpose if he himself is against” Britain leaving the EU, Putin said Friday during a meeting with representatives of news agencies, including AFP.

“Some experts say a Brexit will be to the detriment of Europe. But others say that the EU will be more stable,” Putin said, pointing to the example of British fishermen.

“They explain how hard it is to live with the restrictions on fishing. But there are advantages in other sectors.

“If you consider all these things, it’s very complicated” to choose, he added.

The What UK Thinks average of the last six opinion polls puts the Remain camp on 52pc to 48pc for the Leave campaign, excluding undecided voters.

TIMES’ ‘PRAGMATIC’ REMAIN CASE: The Times swung behind the Remain camp on Saturday, in opposition to its stablemate The Sun, Britain’s biggest-selling newspaper, which is backing a Leave vote.

“The best outcome of next week’s referendum would be a new alliance of sovereign EU nations dedicated to free trade and reform, led by Britain,” it said in a 2,000-word editorial.

The Times said voting to stay was a “pragmatic rather than enthusiastic choice”. “Brexit is unquestionably economically riskier than a vote to remain,” the daily said.

“On balance we believe Britain would be better off leading a renewed drive for reform within the EU rather than starting afresh outside it.” The pound rallied Friday as investors swung their bets towards Britain voting to stay in the EU, in part due to the three-day suspension of campaigning over Cox’s murder.

“The shocking news was seen, at least on the margin, as hurting public sentiment toward the Brexit move,” said Omer Esiner of Commonwealth Foreign Ex­change.

Published in Dawn, June 19th, 2016