There would be no winners and only economic losers if the UK quit the European Union, Goldman Sachs has warned in a note.
Kevin Daly, part of the investment bank’s economic team, has concluded that a British departure from the EU would result in a “loss/loss scenario” in which both the UK and the rest of the bloc would be damaged.
But in a note to investors, Mr Daly added that Goldman does not expect an in/out referendum because the Tories first need to win an outright majority and, the bank reckons, “at this stage, this doesn’t appear likely”.
Mr Daly said a UK exit would “come with a significant economic cost to the UK” because it is “highly integrated” with the EU. The economist noted that trade with the other 26 members of the EU accounts for 16pc of UK GDP.
He dismissed those who argue that Britain could negotiate a trade deal with the EU once it had left. “Given the size and importance of the UK economy, it is unlikely that the UK could negotiate the same access to the EU single market that Switzerland and Norway have achieved,” he said. “In particular, the UK’s ability to conduct business in financial services across the European Union is likely to be severely compromised by a departure from the EU.”
The damage would extend to the EU too, since the UK is the eurozone’s largest trading partner, accounting for 4pc of the bloc’s GDP.
Mr Daly concluded: “We believe that a UK exit from the EU would represent a 'loss/loss’ scenario for both the UK and the EU. However, it is likely that the loss would be greater for the UK than for the EU.”