G20: Brexit would be a ‘shock’

The 'Brexit' debacle, explained

The world economy will suffer a “shock” if Britain leaves the European Union, finance ministers and central bankers have warned.

“Downside risks and vulnerabilities have risen, against the backdrop of volatile capital flows, a large drop of commodity prices, escalated geopolitical tensions, the shock of a potential UK exit from the European Union and a large and increasing number of refugees in some regions,” policymakers said in a joint communique at the end of a two-day G20 meeting in Shanghai.

The U.K. will hold a referendum on membership in the EU on June 23, and markets are becoming increasingly concerned about the impact on trade, jobs and investment if voters choose to leave the bloc of 500 million people.

U.K. Chancellor George Osborne described the prospect of a UK exit as “deadly serious.”

“The financial leaders of the world’s biggest countries have given their unanimous verdict. They say that a British exit from the EU would be a shock to the world economy,” Osborne told the BBC in Shanghai. “If it’s a shock to the world economy, imagine what it would do to Britain.”

Some prominent politicians, including London mayor Boris Johnson, have backed the Brexit campaign. Opinion polls show voters in Europe’s second biggest economy are deeply divided over the issue, and many remain undecided.

Related: IMF chief warns UK against Brexit

Prime Minister David Cameron argues that being part of the club is good for the British economy. But his opponents say EU membership is costly, creates regulatory red tape and allows unlimited immigration.

G20 members also reiterated commitments to not devalue their currencies, and use fiscal tools to boost the global economy. They noted that monetary stimulus alone would not lead to balanced growth.

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