London / Bloomberg
Fancy another recession? Economists say voting to leave the European Union would dramatically increase the UK’s chances of
heading down that road.
As Britons contemplate their place in the 28-nation bloc before June’s referendum, respondents to a Bloomberg survey said the probability of a slump spikes to 40
percent in the event of an “out” vote. That compares with just a 13
percent risk predicted in the most
recent monthly poll.
With the EU debate covering everything from immigration to loss of sovereignty and access to trade, those campaigning for Britain to stay argue that an exit would jeopardize investment, jobs and growth. While the economy has more than regained ground lost in the 2008-2009 recession, that took four years and included a period where unemployment jumped to a 16-year high.
“You would have a lot of uncertainty effects which would materially drag on growth,” said Chris Hare, an economist at Investec Plc in London who previously worked at the Bank of England. “It’s pretty likely that we’ll see volatility in financial markets, possibly a tightening in UK credit conditions, a hit to business and household confidence and all those things combined should drag on the economy.”
Prime Minister David Cameron and others arguing to remain part of the bloc, say an exit would cut trade opportunities and diminish London’s role as an international hub for business and finance.