International Monetary Fund (IMF) Managing Director Christine Lagarde sits for an interview at IMF headquarters in Washington July 1, 2015. REUTERS/Jonathan Ernst

Thomson ReutersIMF head Christine Lagarde.

The International Monetary Fund (IMF) issued its starkest warning yet on Friday that the UK leaving the EU — known as Brexit — would have severe implications for its economy.

House prices in the UK would drop, while London could lose its place as the centre of the financial world, IMF boss Christine Lagarde said. She added that the Bank of England would have to lower interest rates to protect the economy.

An IMF report added that Brexit would hit home-owners and developers particularly hard.

It predicted "sharp drops in equity and house prices, increased borrowing costs for households and businesses, and even a sudden stop of investment inflows into key sectors such as commercial real estate and finance."

In a press conference, Lagarde reasserted that the IMF's views on Brexit were completely independent, saying "We are not into politics. It is out duty to lay out the fact."

Although Lagarde admitted that "we have on occasions been wrong," she said the IMF saw "no positives" for a Brexit and that the consequences could be "pretty bad to very, very bad."

Following the IMF's report, UK Chancellor George Osborne said that the IMF's report "put to rest the fallacy" that a Brexit would result in more money available for public services. He added that concerns over Brexit were already having an impact on hiring and investment into the UK.

The IMF's Brexit comments follow similar ones by the Bank of England on Thursday in which governor Mark Carney said Brexit could help push the UK into another recession.

The referendum about Britain's EU membership takes place on June 23, and as it stands, most polls monitoring "remain" and "leave" sides show they're neck and neck.

But Peter Kellner, former president of one of Britain's most prestigious polling agencies, YouGov recently said they could be wrong, saying “I am not at all confident that the final average poll will be within 2-3 points of the final poll."

uk.businessinsider.com/