If Britain votes to leave the European Union the loss to the UK's gross domestic product would lie between two and seven per cent, according to a top AXA economist.
Senior economist at AXA Investment Managers David Page said that AXA's own assessments of Brexit are more skewed to a "pessimistic outlook", and as such it predicts an expected cost of exit on potential GDP of around two to seven per cent of GDP.
"Financial markets will be pulled in different directions and markets are likely to be volatile post an exit decision," Page added.
And in turn, a deteriorating GDP outlook is "likely to prompt easier monetary policy in the short-term, contributing to a sharp fall in sterling and a modest easing in bond yields. However, we also see equities and credit products falling on such a decision".
In particular, Page predicts that the Bank of England would have to cut interest rates and announce further quantitative easing in response to an exit vote.
The projected cost come as Prime Minister David Cameron attempts to woo his European counterparts into accepting his reform demands.
Cameron is hoping to reach a deal at the EU summit in February, meaning the referendum could be held as early as June.