'Brexit' would lop 4 percentage points off UK GDP growth, hit pound 15-20 percent - Citi

LONDON (Reuters) - Economic growth in Britain would be up to 4 percentage points lower over the next four years and sterling could lose a fifth of its value if the country votes to leave the European Union, economists at U.S. bank Citi said on Friday. Citi is the latest big bank to say that so-called 'Brexit' would take a "significant" toll on the UK economy, hitting sterling and sending inflation sharply higher. "Brexit would probably trigger major economic weakness and a political crisis in the UK ... with a 15-20 percent depreciation of sterling in trade-weighted terms, resultant return to import-driven inflation and a major policy dilemma (for the Bank of England," Citi's team, led by Michael Saunders, wrote in a note. A Brexit scenario we would trim 1-1.5 percentage points off Citi's gross domestic product growth forecasts for 2017, 2018 and 2019, or a total GDP loss of around 4 percent, they wrote. Leaving the EU would hit exports, investment and consumer spending, while workforce growth would slow because Brexit would lead to a drop in inward migration, either because of legal barriers or because of Britain's "reduced attractiveness," they said. The 15-20 percent fall in sterling would lift inflation, which has been virtually zero for the past year, up to 3-4 percent for several years, they added. Sterling is currently worth around $1.45 and the euro around 77 pence . Earlier this week, U.S. bank Goldman Sachs also said the pound could lose up to 20 percent in the event of a vote for Brexit. Prime Minister David Cameron has promised to hold a referendum before the end of 2017 but a date this summer is increasingly expected. (Reporting by Jamie McGeever; Editing by Mike Dolan and Hugh Lawson)