Here's how horrific the economic fallout from a Brexit will be

Britons get to vote on whether the UK should stay in or leave the European Union in the EU referendum on June 23.

But while polls are showing that it will be a close call on the result, Simon Wells and his team at HSBC are the latest analysts to release a report over what could happen if there is a Brexit.

In no uncertain terms, Wells and his team say the consequences are “potentially huge” and not only would the economy be hit pretty badly, things look ugly for the labour market too.

The report is pretty extensive but here are some of the highlights:

  • “Sterling could fall 15-20% against the dollar — pushing it down to 1980s levels — and towards parity with the euro.”
  • -1.5 pp (percentage points) slowdown in economic growth. This roughly halves HSBC’s 2017 forecast for Britain’s GDP of 2.3%.
  • “Inflation and labour costs could rise sharply.”
  • The Bank of England could keep the interest rate at record lows of 0.5% for longer — which is damaging for savers.

In fact, HSBC also provided an infographic that detailed the other major risks Britain faces if it was to leave the EU.

The report comes after investors panicked over Brexit concerns and this led to the pound being pushed to a seven-year low on Monday.

Members of the Bank of England’s Monetary Policy Committee then went into parliament to answer questions over the economy. And what was interesting is that the BoE is that sterling drops isn’t the most major concern for the central bank right now — it is what all the uncertainty does to household spending and corporate investment.

UK flagGettyTwo-year-old Fleur Burrows waves the Union Jack flag, joining thousands of people in front of Buckingham Palace after the announcement of the birth of Prince William, Duke of Cambridge and the Duchess of Cambridge’s second child outside Buckingham Palace on May 2, 2015 in London, United Kingdom.

As my colleague Ben Moshinsky noted this week, “it’s a good point — for example, why would you invest in London now if you might lose access to the single European market later down the line?”

Polls have shown that the stay and leave vote have been neck and neck for some while with the Brexit vote gaining some momentum.

On February 19, a poll suggested the campaign for Britain to leave the EU is leading among people who’ve already decided how they will vote in the upcoming referendum.

Another poll on February 22 by the National Centre for Social Research said that 66% of Britons were unhappy with the UK’s current membership terms but ultimately the nation would vote to stay in the EU.

According to the survey, published by Kantar’s TNS, 36% of respondents said they would vote for Britain to leave the EU on referendum day, which is expected to be June 23, compared to 34% who said they’d choose to remain.

However there are 10 million people that claim they are undecided about how they will vote in the EU referendum. So when it comes to going to polling stations — these people could swing the vote in the end.

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