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'Brexit' could shrink UK economy by 6%: Treasury report

International Monetary Fund chief Christine Lagarde has called on Britain and the EU to save a 'long marriage'


AFP/PTI  |  London 

A Mini car is seen with a Union flag and European Union flag design on its bonnet in London
A Mini car is seen with a Union flag and European Union flag design on its bonnet in London

Britain's exit from the European Union (EU) could see its shrink by 6% by 2030 and cause "permanent" economic damage, the country's finance ministry will say in an analysis due out on Monday, according to media reports.

"The conclusion is clear: for Britain's and for families, leaving the EU would be the most extraordinary self-inflicted wound," Chancellor of the Exchequer George Osborne wrote in The Times newspaper.

"Leave the EU, and the facts are: Britain would be permanently poorer," he said, adding that under all scenarios examined in the report Britain would have a "less open and interconnected economy".

The 6% economic drop forecast was based on the assumption that in the event Britain left the bloc, it would negotiate a trade deal similar to the EU-Canada pact, British media reported.

The 200-page report has been months in the making and is the latest warning from the government about a so-called "Brexit" ahead of a referendum on Britain's EU membership.

Britons will vote on June 23 on whether to remain in or leave the EU, and polls show the two camps neck and neck, while around a fifth of voters remain undecided.

The run-up to the vote is being closely watched across Europe and beyond because of its potentially far-reaching consequences.

The Treasury report is being published just days before US President Barack Obama is due in London on a visit in which he is expected to underline the importance of Britain staying in the EU.

The world's G20 top economies last week warned that one of the looming risks to the global was "the shock of a potential UK exit from the European Union".

Monetary Fund (IMF) chief Christine Lagarde has called on Britain and the EU to save a "long marriage".

Last week, the IMF downgraded its forecast for British economic growth by 0.3 percentage points to 1.9% for 2016, although it held its 2017 forecast at 2.2%.

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First Published: Mon, April 18 2016. 15:32 IST