A referendum on whether Britain should leave the European Union would create economic uncertainty, IMF chief Christine Lagarde said in a report today, adding she hoped the country would remain in the bloc.
"On a personal basis I'm very much hopeful that the UK stays within the European Union," said Lagarde, adding that at this stage it was "premature" to probe the potential consequences.
The head of the International Monetary Fund recognised that "it's a political decision at the end of the day and in that respect we don't give advice."
But she added: "as economists we would like as little uncertainty as possible... Certainty is always better than uncertainty."
British Prime Minister David Cameron has promised to organise a referendum on the issue by the end of 2017 and is engaged in discussions with EU partners designed to push through reforms in the 28-nation bloc.
Cameron faces calls from industry to hold the poll swiftly in order not to prolong the uncertainty on what a "Brexit" could mean amid concerns over the effect on foreign investment and the economy generally.
The IMF will publish its next report on Britain next May examining the potential consequences of a British EU exit, Lagarde said.
The body's latest report highlighted concerns including high house prices and the UK's current account deficit but concluded that, overall, "the UK's recent economic performance has been strong, and considerable progress has been achieved in addressing underlying vulnerabilities".
British Chancellor George Osborne reacted to the report by saying that "today's IMF report, frankly, could hardly be more positive."
The report said factors that needed to be considered if Britain did decide to leave the bloc were: "how quickly will there be trade agreements? How promptly will the partners want to re-establish or reset the framework within which both financial and trade relationships are put in place?"
Away from the EU issue, the report praised the UK's response to the global financial crisis.
"The UK authorities have managed to repair the damage of the crisis like very few other countries have managed," said Lagarde.
"We are saluting a very strong performance by the UK economy.
"The fiscal deficit has been more than halved over the past five years, but both it and the public debt remain high," she said.
The IMF also backed the decision this week by the Bank of England to maintain its low 0.5 per cent interest rate and the current level of quantitative easing "until stronger signs of inflationary pressure emerge".
