Could Brexit Spark a Recession?

The UK is set to make a crucial decision on June 23rd, considering factors beyond monetary and financial stability. The MPC identifies the referendum as a major risk, with potential economic impacts if the UK leaves the EU. This could affect exchange rates, demand, and investment, and tighten global financial conditions. The sterling has already fallen by 9% since November 2015, partly due to referendum concerns. A further decline in sterling could increase inflation, influenced by trade terms, productivity, and risk premiums.

What is the primary concern of the Monetary Policy Committee regarding the UK referendum?

• Global trade agreements

• The referendum itself

• Financial stability

• Monetary stability

How might a vote to leave the EU affect UK households and firms?

• Increase in household consumption

• Immediate economic growth

• Delay in consumption and investment

• Acceleration of firm investments

What could be a global consequence of the UK leaving the EU?

• Rise in global demand for UK exports

• Increase in foreign investments

• Tightening of global financial conditions

• Strengthening of global financial conditions

What has been the impact of the referendum on the sterling exchange rate since November 2015?

• A 5% increase

• No change

• A 9% decrease

• A 9% increase

If the UK votes to leave the EU, what is a likely outcome for the sterling exchange rate?

• It will remain stable

• It will increase sharply

• It will fall further

• It will have no impact