ANNUAL ADVERTISING RATES FOR INSURE-DIGEST

Annual Advertisement Rates

Sunday, February 14, 2016

Brexit: Britain's economy will be worse off if it leaves the EU -by Ana Nicolaci da Costa

Britain's economy would be worse off if voters decide the country should leave the European Union, according to an overwhelming majority of economists polled by Reuters who also gave it a 40 percent chance of happening.

All but one of 28 economists in the poll taken this week said the Britain would take a hit if the vote - which could take place by June - meant exiting the EU. The sole dissenter said the economy would be unmoved, not better off.

Arguments about the economy are central to the debate. Supporters of Britain leaving the EU say companies would be less bound by red tape, the country would be able to strike its own free trade deals and its existing EU partners would not want to hurt bilateral trade.

But analysts at some of the world's biggest banks said an exit could shrink Britain's economy by as much as 2 percent over the next couple of years and could take as much as 10 percentage points off GDP over the next decade.

Most of the mainly UK-based market and academic economists polled expected trade to worsen with Britain struggling to negotiate a favourable trade deal with its former EU partners after renouncing membership of the world's largest trading bloc.

Against this backdrop, a slim majority of economists see Britain's hefty current account deficit widening, underscoring a risk highlighted by the Bank of England.

Britain has been among the fastest-growing rich economies in recent years. But economists worry that an exit from the EU could hurt its prospects if exporters face higher barriers, a weaker pound makes imports more expensive and uncertainty over the shape of a post-EU Britain curbs investment.

"A Brexit outcome will make me more pessimistic for our growth prospects in the second half of 2016 and the medium term," Costas Milas, professor of finance at the University of Liverpool, said.

He said it would trigger "huge" investor  uncertainty and make it more expensive for the government to sell British debt.