Leaving the EU would plunge Britain back into recession, damage the country’s long-term growth potential and drive up government borrowing, Morgan Stanley has warned.
In a comprehensive review of the economic impact of an exit vote at the referendum, the American investment bank said that Britain would “flirt with recession” in the best case and collapse into a full-blown slump if there were difficulties in “resolving post-referendum uncertainties”.
To spur growth in the aftermath of an “out” vote, the Bank of England would hold interest rates steady for a year or even cut them and begin another round of quantitative easing, it said.
The government would be likely to abandon austerity as it adopted an “easier fiscal policy to support growth”.
“We think the Bank