DHAKA: A vote for the UK to leave the European Union could have a ‘negative and substantial effect’ on economic growth, the International Monetary Fund said.

In its regular health check of the UK economy, the IMF said that a Brexit vote would result in a ‘protracted period of heightened uncertainty’, reports the BBC.

That would cause volatility on financial markets and economic output to decline.

Brexit could also erode London’s status as a global financial centre, it said.

The IMF said it expected growth to fall below 2% for the full year in 2016 before returning to an average of 2.25% over the medium term.

However, the fund said that this ‘broadly positive’ forecast was subject to notable risks, the biggest of which was the EU referendum, but also the low level of household savings, high levels of household debt, a wide current account deficit and concerns that productivity growth will not rise significantly.

Concerns about a possible Brexit may have affected UK markets in recent months, according to the IMF.

It pointed to a 40% decline in the number of commercial real estate transactions in the first three months of the year.

Deciding whether to remain in the UK was a choice for voters to make, the IMF said, adding that ‘their decisions will reflect both economic and non-economic factors’.

BDST: 1614 HRS, MAY 13, 2016
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