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Economists aim to fathom depth of Brexit slump

In both Britain and in Germany, experts warn of dire repercussions should the UK choose to leave the EU. Here is a compilation of warnings as the fateful referendum nears.

On June 23, when British citizens vote on a referendum regarding their membership in the EU, they will be faced with an existential question regarding their country's future: should it stick to what it knows or take a leap into the void?

For many voters, this is also a question of figuring out just how deep that void may be. Economic experts around the world have tried to measure it in the run-up to the referendum. Here is a compilation of such voices - many trembling, some soothing - from Britain, Germany and the EU.

German economists

An overwhelming majority of German economists are against Brexit. Munich-based research institute Ifo and the German newspaper Frankfurter Allgemeine Zeitung recently ran a poll on the matter, finding that 85 percent of them are opposed to such a move.

In the poll, over half of the economists said that Brexit would cause the United Kindgom severe economic harm, while another 32 percent expect it to have a negative but modest impact. Furthermore, about 65 percent believe the German economy would suffer a bit from a Brexit, and a further 12 percent worry that the downsides would be big.

But it's not all doom-and-gloom among German economists. One responded to the poll by saying that, "in the long run, Brexit would bring considerable advantages for the entire EU, as Great Britain has been an obstacle for European integration."

ECB building

The European Central Bank (ECB) hasn't come out officially as either for or against Brexit.

The European Central Bank

Some of the ECB's council members don't seem too worried about Britain leaving the EU. Ewald Nowotny, governor of the National Bank of Austria, believes a British withdrawal "would be worse for the British than for the rest of Europe," as The City of London "would lose its status," he told German newspaper Süddeutsche Zeitung.

"I don't see any problem for the financial system, because the scenario of a Brexit has been discussed for quite a while," Nowotny added. "Should it actually happen, who is going to be surprised?"

But Francois Villeroy de Galhau, governor of the Bank of France, isn't taking the prospect so lightly. A Brexit could spell turbulent times ahead - especially for British banks, but also for the eurozone - he recently said.

The British Treasury

Britain's finance ministry has made itself quite clear, on the other hand. A withdrawal from the EU would trigger an intense and immediate economic shock, said Sajid David, Britain's secretary for business, innovation and skills. Brexit would cost at least a half million jobs and shrink economic output by 3.6 percent within two years, he noted in a study published by his ministry.

Such a setback would be similar to scale of the recession that the UK faced at the beginning of the 1990s, Javid continued. Supporters of an exit emphasize though that the Treasury's prognoses have often missed the mark.

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British trade unions

The Trades Union Congress (TUC), a federation representing most of the trade unions within England and Wales, has not grown tired of warning of Brexit's potential consequences either. "It's very likely that the price for British export products would climb in the event of a withdrawal from the EU," said Owen Tudor, leader of TUC's department for European affairs.

"We assume that investments from third countries will sink," Tudor added, a trend that could set off a vicious cycle. Higher costs paired with reduced investment could cost up to four million jobs, he reckons. Among those, positions within the export economy, for example in the automotive and chemical industries, would be most at risk.

Workers rights could also be at stake if Britain were to leave the EU, TUC believes. It estimates that a million British employees may end up working longer in the case of a withdrawal.

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The German economy

German businesses aren't too excited about the prospect either. In the worst case, according to a study by one German bank, a Brexit could cost the German economy 45 billion euros ($51.2 billion) between now and 2017 alone, potentially plunge the country into a recession. Advisors and lawyers are sure to benefit though, billing long hours as businesses prepare for the changed circumstances.

"Brexit's damage would be big for both sides," said Markus Kerber, director general of the Federal Association of German Industry. He expects it would set off a years-long negotiation process over a zillion different agreements, touching on tricky questions about market access and regulatory standards while each side grapples for the biggest advantage. Kerber worried that "it could turn into somewhat of a free-for-all."

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