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Brexit uncertainty weighs on growth outlook: IMF

[LONDON] Uncertainty over Britain's future in the European Union risks negatively affecting the country's growth outlook, the IMF said on Wednesday.

Britain's economy was set to grow by 2.2 per cent this year and next, matching official gross domestic product for 2015, the International Monetary Fund said.

But it warned that "uncertainty associated with the outcome of the forthcoming referendum on EU membership could also weigh on the outlook" along with various other factors including "potential shocks to global growth and asset prices".

As Britain prepares for a June 23 referendum on its EU future, British Prime Minister David Cameron has warned that the country's departure from the European Union would threaten its economic and national security.

But London Mayor and Conservative rival Boris Johnson has dealt a blow by backing a "Brexit" despite Cameron winning a deal on EU reforms.

"Quantifying how a decision to leave the EU would affect the economy is difficult, given that the terms of staying in the EU are still being negotiated and the nature of post-exit relations with the EU are unknown," the IMF said in its latest outlook for Britain.

"However, analysts have raised concerns that the exit debate could bring a period of uncertainty that could weigh on investment," it added.

Almost 200 bosses of top British companies on Tuesday urged voters to keep Britain in the European Union, warning that an exit from the 28-nation bloc would threaten jobs.

Some 198 business leaders including Roger Carr, chairman of BAE Systems, BP chief executive Bob Dudley and Ron Dennis, chief of F1 team McLaren, wrote a joint letter published in The Times newspaper, backing Cameron's deal to reform the EU.

Sterling meanwhile on Wednesday fell below $1.40 to a seven-year low on growing worries that Britain may vote to leave the European Union.

Britain's currency has been hit in recent times also by increased expectations that the Bank of England may wait until at least next year to raise interest rates amid weakening growth at home and abroad, according to analysts.


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