Brexit campaigners have accused the International Monetary Fund (IMF) of trying to “bully” British voters into voting Remain in the June referendum on continued membership of the European Union (EU). The timing of a crucial report due to be published by the IMF is seen as particularly cynical.
IMF Managing Director Christine Lagarde (pictured above with George Osborne) today used the opportunity of a visit to London to tell British voters there were no economic positives to Britain leaving the EU, a move with “significant downside risk” the impact of which would range from “pretty bad to very, very bad”.
Ms. Lagarde claimed the “majority of economic analysis” shows that a vote for Brexit would be “costly in the long run” with a “protracted period of uncertainty”, and there would be an “adverse market reaction” to a Leave vote in the short term.
As a result she predicted a “significant depreciation of sterling” and “large contractions investment and consumption, implying lower output, lower growth, and higher domestic prices.”
The economic arguments put forward by Ms. Lagarde were not backed by hard data, but she said such detailed forecasts will be published, most likely on 16 June, just one week before the referendum. That move is planned by the IMF despite it having delayed a similar report ahead of the last General Election in case it might have an impact on the result.
The promised date of publication also happens to mark the same day Chancellor of the Exchequer George Osborne and Governor of the Bank of England Mark Carney will make their keynote speeches at the annual Mansion House Dinner.
However, the timing is of particular significance for another reason, as it conveniently falls well within the 28 day ‘purdah period’ when the government is not allowed to publish its own official warnings on EU membership.
The Leave campaign has alleged that the government is using the IMF to “circumvent purdah rules”, although Ms. Lagarde denies any interference from the Treasury.
Pro-Brexit campaigners questioned the IMF’s track record in forecasting, pointing out it had both backed the euro and failed to predict the last financial crisis. Others suggested the organisation was colluding with the government to “bully” the UK into backing continued membership of the EU.
Priti Patel, the pro-Brexit Tory who is Minister of State for Employment, tore into the IMF and her Cabinet colleague, Mr. Osborne, saying:
“The IMF warned Britain it was playing with fire when it set out a plan to deal with the deficit. Now our economy is stronger than nearly every other major economy. Today, the IMF is talking down Britain because we want to take back control from Brussels.
“They were wrong then and they are wrong now.
“The EU-funded IMF should not interfere in our democratic debate a week before polling day. It appears the Chancellor is cashing in favours to Ms. Lagarde in order to encourage the IMF to bully the British people — it is a sign of the desperation in the IN campaign.”
Former Chancellor of the Exchequer Lord Lamont of Lerwick said of the intervention: “This daily avalanche of institutional propaganda is becoming ludicrous and pitiful.
“Important institutions are being politicised and used to make blood-curdling forecasts.
“There are plenty of respected individual economists, plenty of respected professional investors, and plenty of entrepreneurs who take a very different view from Christine Lagarde and who have probably been better at foreseeing the future than the IMF.
“Not so long ago the Chancellor was berating the IMF for being too pessimistic about the British economy. Now the Government is cheering it on.”
The IMF’s enthusiasm to intervene ahead of the referendum stands in marked contrast to the European Commission.
According to Politico, that body has postponed its presentation of a draft EU budget for 2017 until after the referendum, claiming the delay is caused by the need to factor in new spending to deal with the ongoing migrant crisis.
While a Commission official denies any link to the referendum, parliamentary sources told Politico the decision is widely seen as an effort to avoid a discussion of EU spending before 23 June. It has already delayed the presentation of a review of the EU’s seven-year budget plan until the autumn so as not to fuel Euroscepticism this side of the referendum.
This tallies with comments made by European Commission President Jean-Claude Juncker, who yesterday confirmed to a German audience he will not be campaigning for a Remain vote in the UK because, as The Express reports, he believes “the European Commission is even more disliked in Britain than in Germany.”
AFP and Reuters contributed to this report.