His warnings came as:
* French bank Societe Generale analyst warned Italy and France could quit the single currency EU
* Rating agency Moody’s said the future of the entire EU was at risk
* Banks across Europe came under increasing stress
* The world’s biggest hotel group predicted that the fall in the pound would lead to a tourist boom for the UK.
But the IMF has also said that the outlook would be even worse if there are long, drawn-out negotiations between the UK and the EU.
Mahmood Pradhan, deputy director of the IMF’s European Department, said: “If that risk aversion is prolonged, we think the growth impact could be larger and at this point, it is very difficult to tell how long that period lasts.”
The Washington-based fund hightlighted the UK’s importance as a trading partner for the EU as the destination for 13 per cent of EU exports.