IMF warns Denmark of risk for exports if Britain quits EU

COPENHAGEN (Reuters) - Denmark’s exports to the UK would probably suffer if the British vote to leave the European Union at referendum in June, the International Monetary Fund said on Wednesday.

Great Britain is Denmark's third-largest market after Germany and Sweden, with exporters such as dairy group Arla, insulin maker Novo Nordisk NOVOb.CO and toymaker Lego.

“If a Brexit would happen that would likely affect trade flows, which are important for Denmark, and it would have significantly effect in international financial markets”, David Hofman, the head of an IMF delegation said.

“There will be a prolonged period of uncertainty during which the UK needs to renegotiate trade arrangements. This prolonged period of uncertainty could have an effect on trade more broadly,” Hofman told reporters at the Danish central bank.

Just under half of Denmark’s goods and services are sold to five countries, making it especially vulnerable to the health of the economies around it.

Concluding an assessment of the Danish economy, the IMF noted that growth had been below that of neighbours Sweden and Germany and that: “The ongoing recovery (from the global financial crisis) is expected to remain gradual and muted.”

The government last week lowered its GDP growth forecasts to 1.1 percent this year and 1.7 percent next year, down from a December forecast of 1.9 percent and 2.0 percent.

Reporting by Ole Mikkelsen; Editing by Robin Pomeroy