Leaving the European Union could cost Britain as much as £100 billion ($144 billion) and 950,000 jobs by 2020, according to research commissioned by a business lobby group.
The Confederation of British Industry said dropping out of the union would "cause a serious shock to the U.K. economy." It was commenting on the analysis carried out by professional services firm PwC.
Britain will hold a referendum on June 23 to decide whether to remain a member of the EU, or to leave -- the so called Brexit. Polls show voters in Europe's second biggest economy are divided over the issue, and many are undecided about how to vote.
Prime Minister David Cameron and other senior members of the government are campaigning for the country to stay in the EU. They say the economic benefits outweigh the negatives.
Backing them are a number of multinational businesses and industry bodies -- most recently the CBI, which represents 190,000 businesses employing 7 million people.
"Leaving the European Union would be a real blow for living standards, jobs and growth," said Carolyn Fairbairn, the director of CBI.
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The PwC report, published Monday, considered two scenarios depending on how easily Britain could negotiate new trade agreements with the EU if it gives up membership of the bloc.
The more optimistic scenario expects a new free trade agreement concluded within five years of the referendum. But even then the firm forecasts British GDP to be 3% lower by 2020 than if the U.K. stays in.
The more pessimistic scenario, which foresees trade talks dragging on, envisions GDP to be 5.5% lower by 2020.
Under both, the uncertainty related to Brexit does the most damage to the economy because it would hit business confidence and force companies to delay investment and hiring decisions.
Some jobs could be lost, and the slower rate of growth would mean fewer new positions, PwC said.
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But the Vote Leave campaign, which argues for Brexit, dismissed the CBI warning.
The campaign's chief executive, Matthew Elliott, said the U.K. economy would continue to grow outside the union.
"If we want to take back control and strike the kind of free trade deal the CBI refuses to even consider, the only safe option is to Vote Leave," he said.
Several high profile politicians, including London mayor Boris Johnson, are campaigning for Brexit. The campaign has also received the backing of 200 smaller businesses, who argue that Europe's bureaucracy is costly and hurts their firms.
