EU Referendum

Reality Check: What would Brexit mean for global economy?

MPC quote: The outcome of the referendum continues to be the largest immediate risk facing UK financial markets, and possibly also global financial markets.

The claim: The EU referendum is a big risk to UK and global markets.

Reality Check verdict: There is considerable uncertainty about any predictions about what would happen to the economy, but the Bank of England's warning that leaving would be bad for it are in line with mainstream economic thinking.

There were dire warnings from the Bank of England's interest rate setting Monetary Policy Committee (MPC) about the impact the UK leaving the European Union would have.

In the minutes from its latest meeting, the MPC warned the pound "would fall further, perhaps sharply" if there was a Brexit.

Currencies generally get stronger or weaker based on what the markets think about how strong economies are.

A weaker pound would make imported goods more expensive in the UK, which would cause inflation, and it would make holidays in Europe more expensive.

But it would make products and services provided in the UK cheaper to customers overseas, which would be good news for exporters.

The MPC said leaving the EU would worsen the terms of trade, reduce productivity and increase the level of risk associated with the economy.

It also warned of the danger posed to the global economy, saying that the referendum campaign had dampened sentiment in traders around the world.

"The outcome of the referendum continues to be the largest immediate risk facing UK financial markets, and possibly also global financial markets," it said.

The warnings followed a robust response from Bank of England governor Mark Carney to a letter from Vote Leave campaigner Bernard Jenkin MP, who had reminded him of rules preventing publicly funded bodies making statements in the month leading up to the referendum that might influence it.

Mr Carney stressed that the warnings were part of the normal job of the MPC to provide an assessment of the state of the economy and risks facing it.


Read more: The facts behind claims in the EU debate


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