Investment bank says there is a 'high risk' of UK voting to leave the EU in 2016 as markets have ignored looming referendum.
There is a near 50% chance Britain will vote to leave the EU this year, a decision that would inflict "significant economic damage" on the UK over the next decade, a leading investment bank has warned.
Analysts at Société Générale are placing 45% probability on 'Leave' winning out in a referendum on Britain's EU membership, set to take place this year.
A decision in favour of Brexit would condemn the economy to at least 10 years of lower growth, wiping 0.5-1% off annual GDP until 2026, said the French bank.
There is a high risk that the UK could vote to leave the European Union with significant economic damages resulting".
Although no formal date for the in/out referendum has been announced, a vote could take place as early as the summer following the conclusion of negotiations with Brussels in February, said Soc Gen.
"Financial markets seem to have taken little notice of this event," said Patrick Legland, head of global research at the bank.
"There is a high risk that the UK could vote to leave the European Union with significant economic damages resulting from such a risk scenario," said Mr Legland.
Soc Gen's forecast comes as polls have narrowed significantly in recent months. A survey by Ipsos Mori and ICM placed the proportion of voters for 'Leave' at 41%, compared to 42% for 'Remain' in December.
However, a separate poll of polls shows the Remain camp holding a robust 10-point lead of 54%, against 44% for Leave, according to Matthew Goodwin, a fellow at the Chatham House think tank.
Soc Gen said the eurozone would also suffer "substantial" adverse effects if Britain left the EU, reducing the single currency's GDP by 0.1-0.25% over the next decade.
Although the analysis does not flesh out the precise causes of lower domestic growth, economists have warned of investors fleeing for the exits and causing a run on the pound the day after a Brexit vote. [...]
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