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Conference 2016: EU exit 'disastrous' for UK economy, warns Pryce

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Conference 2016: EU exit 'disastrous' for UK economy, warns Pryce

A 'no' vote in the EU referendum would be 'disastrous' for the UK economy, according to economist Vicky Pryce.

The Conservative government has promised to hold an referendum on the UK's membership of the EU by the end of 2017. The referendum is expected to be held later in 2016.

If the UK votes to leave the EU the government will have two years to prepare the country for an exit.

Speaking at the New Model Adviser® 2016 conference in London, Pryce said the uncertainty of that two year period would be 'disastrous' for the UK economy and this would continue even after the picture was clearer.

'There is a lot of confusion in people's minds as to what it [a no vote] will mean,' she said. 'We will know after two years what it will mean, which will be disastrous for the economy, and after that even more so.

'I'm afraid it will mean a completely new relationship with Europe, an unknown relationship with Europe.'

She said one of the key problems with leaving the EU was that the main driver behind economic growth in the UK was high levels of migration driven by EU membership.

'Migration, as the government's own independent advisers will tell you, is going to be the backbone of the economy and a driver for growth,' she said.

'We need that otherwise our debt levels will be high, and our deficit will be high. That tends to be forgotten in discussions about the referendum'

Pryce also said the Federal Reserve's decision to raise US interest rates by 0.25% last December was 'premature' and would cause problems for countries with denominated debt.

'Raising interest rates in the US has actually made the whole situation worse,' she said.

'A number of developing countries have dollar denominated debts. Even though the interest rate rise was only a quarter of a per cent, and  the first rise in nearly ten years, it means everyone with dollar denominated debt ... has an awful lot more to pay,' she said.

'Debt levels are still very high across the world, and of course with any increase in that debt we will see more of a slowdown in the world economy. I think it was the wrong thing to do , I think it was premature.'

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