European Union

Brexit endangers UK state pensions, NHS,Prime Minister David Cameron warns

U.K. Prime Minister David Cameron delivers a speech on June 7 in London on the upcoming Brexit referendum. He has warned state pension increases and ring-fenced health spending could be at risk if the U.K. leaves the EU.
Daniel Leal-Olivas | AFP | Getty Images

British state pension increases and ring-fenced heath spending would be in danger if voters chose the Brexit, Prime Minister David Cameron warned in a Sunday interview with the Observer.

As a poll showed that the majority of British people were in favor of leaving the European Union (EU) - a departure known as the Brexit - Cameron said that voters needed to face the "cold reality" of the austerity that would be required if the U.K. was outside the EU.

He referred to research by the Institute of Fiscal Studies and the National Institute for Economic and Social Policy that showed the Brexit would create a black hole of up to 40 billion pounds in U.K. public finances by 2020.

"You would have to start cutting things that people really value, whether it is the money going to the NHS [the state health service] or whether it is support for our pension system, and that could mean reviewing the triple lock," Cameron said in an exclusive interview with the Observer, published on Sunday.

The "triple lock" referred to a guarantee that the state pension would rise annually in line with whichever was higher: earnings, inflation or 2.5 percent.

To read the full Observer report, click here.

What to expect in Brexit vote

Brits are due to vote on June 23 in a referendum on Eu membership.

The Prime Ministers comments, which he told the Observer were not designed to scare the public into voting against the Brexit, followed a ORB poll of 2,000 people published on Friday by the Independent, which showed 55 percent of respondents believed Britain should leave the 28-member trade bloc, against 45 percent who favored staying in the EU.

The pound dropped as much as 1.2 percent against dollar after the poll was published, while the FTSE 100 closed down almost 1.9 percent at 6,115.76 points.

"Bond King" Bill Gross, who runs the $14 billion Janus Global Unconstrained Bond Fund, warned on Friday that a Brexit had the potential to cause market upheaval because if Britain exited, others may follow.

"France ... or Italy might suddenly decide their own domestic internal policies should be favored versus that of a larger EU family," Gross said in an interview with CNBC's "Power Lunch."

"If Brexit wins, then fear gets into the marketplace and positions in terms of expectations for growth - anemic as it is in euro-land - become threatened."

Your BREXIT playbook: 5 trades to make

But two surveys published on Saturday showed divergent results on the possibility of a Brexit.

A poll by Opinium for the Observer suggested 44 percent of Britons backed continued membership of the bloc, with 42 percent against and 13 percent undecided. And a YouGov poll for The Sunday Times showed support for Brexit at 43 percent, with those who wish to remain part of the EU at 42 percent.

- Reuters contributed to this report.

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