EU referendum: Manufacturers warn Brexit would be "lose-lose" for EU exporters as Capital Economics says Brexit could cause "significant damage" for EU economies

Lauren Fedor
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Brexit could cause "significant damage" for EU economies (Source: Getty)

A top economist warned today that Britain leaving the European Union could wreak "significant" damage on EU economies.

In a client note published earlier today, Jennifer McKeown, senior European economist at Capital Economics, said that while a so-called Brexit would have only "small" costs or benefits for the UK over the medium term, a British exit from the single market would deal a major blow to the UK's EU counterparts, with a "strongly negative" effect on European economies.

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McKeown noted that trade, foreign direct investment, fiscal policy, reform and overall market confidence in EU countries could all take a hit if British voters backing leaving the 28-country bloc.

The Capital Economics note came on the same day as a new report from the largest EU manufacturing association showing that Brexit would be "lose-lose" for both British and European exports.

According to the report from the Council of European Employers of the Metal, Engineering and Technlogy-based industries (CEEMET), British industry would suffer a drop in output of 0.5 per cent each year if voters back Brexit, with medium-sized manufacturers to be among the hardest-hit.

"The academic review of the impact on economic growth in the UK is a cause for concern," said EEF chief executive Terry Scuoler. "In the forthcoming referendum British people will ultimately have to make a choice between the European Union – which although ripe for reform, is inextricably linked to UK’s prosperity as the fifth-largest economy in the world – and the uncertainty and doubt of life outside the EU."

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