A campaigner with Britain Stronger in Europe, the official
A campaigner with Britain Stronger in Europe, the official "Remain" campaign for the forthcoming EU referendum, hands out leaflets in central London on April 15, 2016. (Xinhua/AFP)

A poll by British research firm ORB published Monday showed that 51 percent of those surveyed are in favor of Britain remaining in the bloc, while 46 percent favor a so-called “Brexit.” However, the lead of the “Stay Camp” shrank 8 points from a week ago.

A campaigner with Britain Stronger in Europe, the official "Remain" campaign for the forthcoming EU referendum, hands out leaflets in central London on April 15, 2016. (Xinhua/AFP)
A campaigner with Britain Stronger in Europe, the official “Remain” campaign for the forthcoming EU referendum, hands out leaflets in central London on April 15, 2016. (Xinhua/AFP)

In the lead up to the referendum on June 23, various regional and global institutions have issued warnings on the adverse effects of a Brexit, in contrast to opinions of EU skeptics in Britain who hold that a withdrawal from the bloc would allow the country to do what is best for itself, rather than having to abide by EU rules.

By leaving the EU, Britain could suffer in trade and economic growth, and a Brexit would compromise London’s status as a global financial center, according to economists and observers.

TRADE: RISKS OUTWEIGH BENEFITS

The EU is Britain’s largest trade partner, accounting for nearly half of Britain’s foreign trade. If Britain were to leave the bloc, it would face high tariff duties and other non-tariff barriers when selling goods and services to EU members.

Meanwhile, Britain may have to conduct lengthy negotiations with each EU member so as to regain access to the single market, experts say.

“A UK exit from the EU would reverse the trend towards greater global trade and investment, and the jobs they create, and is a further serious risk to growth,” G7 leaders said Friday in a declaration after talks largely focused on kickstarting the world economy.

The uncertainty surrounding the June 23 referendum has already had a negative impact on the British economy, which grew only 0.4 percent in the first quarter of this year, down from the 0.6 percent growth rate for the last three months of 2015.

The country registered a trade deficit of 13.3 billion pounds (about 19.4 billion U.S. dollars) during the period, the highest since 2008.

Meanwhile, the country’s industry output shrank 0.4 percent for the first three months of this year, marking the second consecutive contraction of the figure.

The British currency lost 9 percent of its value since November, mainly due to concerns over the prospect of Britain’s withdrawal from the 28-member bloc, according to a recent report by the Bank of England. The British central bank also warned that the sterling would lose up to 20 percent of its value in a short time in case of a Brexit.

SHADOW OVER LONDON’S FINANCIAL APPEAL

London is home to many global financial institutions and multinational companies. However, its status as a key global financial center would face tough challenges if Britain were to leave the EU.

According to Angel Gurria, secretary general of the Organization for Economic Cooperation and Development (OECD), a Brexit would trigger panic selling of British assets and dent business confidence across the country in the short term, and Britain would slowly lose its appeal as a destination for global investment in the long run.

Many London-based banks would have to relocate to other parts of Europe since a Brexit would make it impossible for them so sell services throughout the bloc, JP Morgan chief executive Jamie Dimon told Financial Times.

However, backers of a Brexit believe that leaving the EU does not necessarily mean a capital outflow for Britain, and the City of London would continue to prosper given its various advantages including judicial integrity and lower tax rates.

Source; Xinhua/NewsGhana.com.gh

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