LONDON (AP) – The Bank of England warned Thursday of big risks to Britain’s economy should voters opt in a June referendum to leave the European Union – a stark assessment from an institution known for being independent of political campaigns.
Members of the Monetary Policy committee said in a statement after deciding to keep interest rates on hold that a vote to leave the EU could prompt households and firms to delay spending, lowering demand for labor and causing unemployment to rise.
“This combination of influences on demand, supply and the exchange rate could lead to a materially lower path for growth and a notably higher path for inflation,” the report said. “In such circumstances, (policymakers) would face a trade-off between stabilizing inflation on the one hand and output and employment on the other.”
The intervention is unusual as the bank has so far remained detached from the hurly-burly that has characterized the debate ahead of the so-called Brexit vote on June 23.
Amid signs the economy is beginning to falter and uncertainty over next month’s vote, the nine policymakers unanimously agreed in their meeting to leave the key interest rate at 0.5 percent.