Expect the British pound to plunge against the US dollar if Britain votes to leave the European Union next week, an investment expert said yesterday.

Henk Potts, director of global investment strategy for Barclays Wealth, also warned that the impact of a Brexit could lead to a further fragmentation in the European Union.

Speaking at the Bermuda Captive Conference yesterday, as four polls in the UK showed the “leave” campaign forging ahead, Mr Potts said investors would need to be ready for effects that reached far beyond Britain in the case of Brexit.

Mr Potts said Britain had been a bright spot in the global economy in recent years with the strongest rate of growth in the developed western world, but the weakness of its exports was a concern.

“There has been a significant reduction in internal and external investment in the run-up to the referendum, but if Britain votes to leave there will be much more disruption as trade agreements will have to be rewritten,” Mr Potts said.

“This will put extra pressure on the under-performing export sector and the two years we would have would not be enough to negotiate better trade agreements, in my opinion.”

In terms of policy response from the Bank of England, Mr Potts said there would be a change of course from the central bank’s aim to raise rates, probably by the second quarter of next year.

“In the case of Brexit, we would expect the Bank of England to cut rates down to zero and increase its asset purchase programme by £100 billion [$141 billion],” Mr Potts said.

“Sterling has fallen by 9 per cent against the dollar since November and would probably fall another 10 per cent. As growth slows and sterling weakens, the Bank of England would then probably have to raise rates, which would further weaken the economy.”

However, Mr Potts warned that Brexit should not be viewed as solely a UK issue, but rather “through the lens of the EU”. A breakaway Britain would heighten fragmentation risk, he said, especially with national elections coming up in Italy, France and Germany over the next two years.

While his firm Barclays had no view, Mr Potts said that in his opinion Britain would be better off staying in the EU, which is the largest trade bloc in the world with 500 million residents.

The free movement of labour allowed a “big talent pool to choose from” and Britain had been a major beneficiary of investment within the bloc, he added.

Mr Potts and Ryan Wang, of US economist for HSBC Securities, gave conference delegates an overall outlook for the global economy that could be summarised as “more slow growth”.

Both experts believe the US Federal Reserve will raise interest rates by 25 basis points in September. Next year, Mr Wang expects two more quarter-point increases, while Mr Potts sees the Fed funds rate climbing to 1.5 per cent by the end of 2017.

Mr Wang said industrial output had pulled back sharply in the US over the past two years. Net exports had become a negative factor in economic growth, while business investment was slowing, exacerbated by the shrinkage of the US energy sector in response in the plunge in oil prices since mid-2014.

Consumption and housing were the biggest drivers of US growth, while government spending had become a positive factor in growth for the first time in five years.

The most recent non-farm payroll figures from the US Department of Labour shocked the markets with just 38,000 new jobs created in May. Mr Wang said this could signal a natural slowing down of job growth after a vigorous period of job creation.

“In 2014 and 2015, we averaged about 240,000 new jobs per month — that’s the equivalent of around 2 per cent jobs growth per year,” Mr Wang said. “That rate is not sustainable, with unemployment below 5 per cent, and so we may be seeing a slowdown to a more sustainable rate of job growth.

“We do see job gains continuing, but at the 200,000-plus rate.”

Wage growth was ticking higher, between 2.5 per cent and 3.5 per cent, according to different surveys, boding well for continued consumer strength. However, productivity growth of only 0.5 per cent was a major concern for the economy.

Mr Potts said Barclays expected the US economy to grow by 1.8 per cent this year and 2.4 per cent in 2017. While earnings for S&P 500 companies had pulled back this year, he expected it to rebound — with growth of around 14 per cent — next year.

He added that the S&P 500 was trading at around 16.8 times earnings. The past 15 times the market had traded at this level, it had gained by between zero and 32 per cent over the next 12 months, he added.