Osborne welcomes Brexit warning from IMF as it cuts outlook for UK growth

Jake Cordell
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If Britain votes to leave in the referendum on 23 June it could cause serious global instability, according to the IMF
If Britain votes to leave in the referendum on 23 June it could cause serious global instability, according to the IMF (Source: Getty)

Brexit could cause major instability to the UK, European and world economies, the International Monetary Fund (IMF) has warned in its latest forecasts for global growth, as Brexit campaigners rounded on the group for "talking down Britain".

"A 'Brexit' could do severe regional and global damage," the IMF predicted, as it cut its outlook for growth in the UK and around the world.

Map: How the global economy will fare in 2016

The Fund now expects the UK to expand by just 1.9 per cent this year, down from a prediction of 2.2 per cent made in January.

"The planned June referendum on European Union membership has already created uncertainty for investors," the IMF added, as it said Britain faced significant "headwinds" in the run-up to the vote which could weigh on growth.

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In response to the report, chancellor George Osborne said:

While Britain remains one of the fastest growing advanced economies in the world, the IMF’s warnings about our exit from the EU are stark. For the first time, we’re seeing the direct impact on our economy of the risks of leaving the EU.

The IMF says that these risks are a reason why they have reduced Britain’s growth forecast this year.

If Britain leaves the EU, the IMF says there would be a short-term impact on stability and long-term costs to the economy. If the British economy is hit by the mere risk of leaving the EU, can you imagine the hit to people’s income and jobs if we did actually leave?

The IMF has given us the clearest independent warning of the taste of bad things to come if Britain leaves the EU.

Vote Leave, one of the groups campaigning for Britain to leave the European Union, attacked the IMF, saying it was "mistaken" about what the implications of an out vote on 23 June would be. Matthew Elliott, chief executive of the outfit, said:

The IMF has talked down the British economy in the past and now it is doing it again at the request of our own Chancellor. It was wrong then and it is wrong now. The irony is that if we Vote Remain our voice at the IMF will be silenced as the EU wants to take our seat at the top table in return for the £350 million we hand to Brussels every week.

The biggest risk to the UK’s economy and security is remaining in an unreformed EU which is institutionally incapable of dealing with the challenges it faces, such as the euro and migration crises.