An exit from the European Union posed no positive outcome for the U.K. and the fallout from such an event would be "pretty bad to very, very bad", International Monetary Fund Managing Director Christine Lagarde said Friday.
The warning came as the Washington-based lender released a regular review on the U.K. economy. "A vote for exit would precipitate a protracted period of heightened uncertainty, leading to financial market volatility and a hit to output," the IMF said in the report.
"The long-run effects on UK output and incomes would also likely be negative and substantial," the lender warned.
"Brexit" posed a significant downside risk and is a global issue that concerns the whole world, Lagarde said. She also cautioned that "Brexit" could lead to technical recession, implying at least two consecutive quarters of negative growth, echoing warnings from the Bank of England.
Further, the IMF said there was wide uncertainty around the market reaction to a leave vote as the historical experience with similar events was limited, but an exit is expected to be "negative and could be severe".
"The IMF are very clear today: the hit to growth we could expect from a vote to leave would cost our public finances more than the amount we'd gain from no longer contributing to the EU budget," Chancellor George Osborne said.
"Put simply, the IMF says a vote to leave costs us money."
The Vote Leave that campaigns for a UK exit from the EU responded saying, "The IMF has been consistently wrong about its forecasts for the UK economy. It is wrong now."
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