International

Brexit: IMF warns of economic ruin

A day after the governor of the Bank of England Mark Carney’s dark warning that a Brexit vote could push the U.K. into recession, comes another prediction of economic doom.

Head of the International Monetary Fund, Christine Lagarde, on Friday offered a gloomy economic forecast in the event of Britain voting to leave the EU in the in-out referendum to be held on June 23. “A majority of economic analysts agree that a vote to leave the EU would be costly in the long run, even after the uncertainty has been resolved.” And in the short term, “there is also risk of an adverse market reaction to a leave vote. This would imply a depreciation of the sterling and large contractions of investment and consumption,” she said.

The anti-Brexit clamour has in recent days been joined by voices from some influential quarters. Last month, the World Bank President Jim Yong Kim said that though it’s a matter for British voters to decide, “given our projections of lower growth this year – that is not going to do well with more uncertainty.”

If the U.K. did not remain “after some weakening as we saw earlier this year, we would expect growth to rebound over the remaining of the year, reaching just about 2 per cent with continued lowered employment and inflation,” Ms. Lagarde said.

Pushed on the defensive, Pro-Brexit campaigners have accused the other side of bullying and fear-mongering.

U.S. President Barack Obama utilised his visit to the U.K. to openly canvas for Britain to stay in Europe, breaking the long-accepted convention of heads of countries not offering opinions on the domestic affairs of another country. Recently, five former NATO secretaries-general wrote to the Daily Telegraph warning of the security threat to the U.K. that a vote to leave would create.

“Brexit would undoubtedly lead to a loss of British influence, undermine NATO, and give succour to the West’s enemies just when we need to stand shoulder-to-shoulder across the Euro-Atlantic community against common threats,” they said in their letter.

Lord Lamont, the former Tory chancellor in a statement criticised the “daily avalanche of institutional propaganda” as being “ludicrous”, Daily Telegraph reported. “Perhaps what she is really afraid of is that if Britain leaves the EU, other countries in the EU will want to hold referendums on their membership of the EU.”

Ms. Lagarde denied allegations that the Treasury had any influence on her views. However,

A report by the IMF, in which it will lay out in greater detail the danger to the British economy from Brexit, will be made public in the last week of the campaign – time enough to swing a large section of undecided and uninformed voters.


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Printable version | Dec 5, 2021 9:02:46 AM | https://www.thehindu.com/news/international/Brexit-IMF-warns-of-economic-ruin/article14317453.ece

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