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EU is 'sinking' and UK should leave, says economist

Brexit: Bad for the economy?
Brexit: Bad for the economy?
Brexit impact on stocks, bonds & commodities
Brexit impact on stocks, bonds & commodities
Brexit-proof your portfolio
Brexit-proof your portfolio
Brexit market risks
Brexit market risks

The European Union is too big and is "sinking," and the United Kingdom should take the chance to get out while it can, economist David Malpass said Friday.

British citizens vote next Thursday on whether the U.K. should exit the union.

"The EU is just too big. It's too expensive. It doesn't work," the president of Encima Global said in an interview with CNBC's "Power Lunch."

"They haven't even made progress on their mission, which was fiscal responsibility, banking reforms, defending the external borders. They're just not doing the job."

He believes the Brits should not squander the opportunity, noting that the last referendum the country held was in 1975.

"These opportunities come along once in a generation where people actually get to vote on what they want."

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However, Gregory Daco, chief U.S. economist for Oxford Economics, believes a Brexit would be negative for the U.K. economy, as well as the EU economy.

"It might not have that much of an impact on the U.S. economy per se, but overall I think it would be a negative, especially in the short run," he told "Power Lunch."

"It would hamper trade. … It would also hamper investment."

The U.S. stock market will also not be immune to next week's vote.

David Seaburg, head of sales and trading for Cowen and Company, believes if the vote is to leave, the trade will be risk-off. If the vote is to leave, it will be risk-on.

"We're looking at a market right now that is teetering on, I'd say, a massive pullback either way," he said.

"If they vote to stay … the market's going to take off. It's going to ignite, it's going to be a risk-on sort of event that is going to be very short-lived."

Todd Colvin, senior vice president of global institutional sales at Ambrosino Brothers, said if the U.K. leaves, it will open Pandora's box a little bit.

"We're going to see bonds continue to rally. We'll probably see equities sell off and gold. Don't forget gold is out there — it's been rallying very strong and that's been a great indicator for the risk-off trade."

So what should investors do to protect against a possible Brexit?

Robert Luna, CEO and chief investment officer for Surevest Wealth Management, would look at companies with little or no exposure to the EU. Specifically, he likes Amerco, Nordstrom and Travelers.

Mark Yusko, CEO and chief investment officer for Morgan Creek Capital Management, isn't betting on a leave vote, calling it "much ado about nothing."

However, if the U.K. did vote to leave, he would want to be very defensive in the United States and hold things like gold, gold miners and Treasuries, because things could get "ugly."

That said, even playing offense going into the vote could be "interesting," he added. He would look at European banks, as well as U.S. financials, since a stay vote would give the Federal Reserve the green light to discuss raising rates again.

Disclosures; Luna and his family own UHAL.