A decision by Britain to leave the EU would result in a “negative and substantial” hit to the economy, “permanently lower incomes” and harm the economies of other European states, according to the International Monetary Fund.
In the short term, a difficult exit could push the economy into recession next year, and even a relatively smooth transition would have a “material impact”.
In the longer term, the damage caused by an extended period of uncertainty and the likely higher costs of trade would be sufficient to wipe out any gains from reduced contributions to the EU, the IMF concluded.
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