LONDON: The International Monetary Fund warned Friday that Britain's potential exit from the European Union would weigh on economic activity and spark markets volatility.
"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 its latest healthcheck on the British economy.
The institution added however that the economy would rebound in the second half of this year if Britain voted to remain in an EU membership referendum on June 23.
The IMF report was published one day after Bank of England governor Mark Carney warned that Brexit could prompt a technical recession, or two straight quarters of economic contraction.
The Washington-based IMF added Friday that global market reaction was "expected to be negative and could be severe" if Britain departs from the 28-nation bloc.
It predicted that increased barriers arising from Brexit would hit trade, investment and productivity, resulting in "negative and substantial" long-term effects on economic output.
Gross domestic product would be reduced by between 1.5 and 9.5 percent -- with any loss greater than 1.0 percent more than offsetting any gain from the elimination of Britain's EU budget contributions, according to the IMF.
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