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Sterling ‘to fall’ if Brexit takes place

By Roger Baird

Published 11/05/2016

A Brexit could drive Sterling down “by around 20%” and would in turn drive inflation up to 4% higher, a think-tank has warnd
A Brexit could drive Sterling down “by around 20%” and would in turn drive inflation up to 4% higher, a think-tank has warnd

The pound could tumble by a fifth in the volatile aftermath of the UK leaving the European Union (EU), The National Institute of Economic and Social Research (NIESR) has warned.

The think-tank said if Britain votes to leave the EU on June 23, “the current heightened levels of uncertainty are likely to persist, if not intensify, as the UK establishes its place outside the EU”.

It said this would see sterling initially fall “by around 20%” and would in turn drive inflation by between 2% to 4% higher than it would be if the UK had stayed in the EU.

Over the long term Brexit would lead to lower exports, higher domestic prices and lower wages that would mean every person in the UK would be between £500 and £2,000 worse off a year by 2030, the body said.

NIESR said Brexit would reduce EU markets open to Britain, and would see trade tariffs for UK exports into the region rise by 5%.

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