Jen Spahn, parliamentary state secretary in the ministry, told German broadcaster ARD that finance and equities markets were already anxious about the possibility that Britain could exit the bloc, but the reaction to a "Leave" vote could trigger far greater volatility.

"It will be important to demonstrate stability," Spahn said. He said a British exit from the EU would be a huge loss, but it would be critical for Germany and the rest of the European Union to demonstrate unity and a determination to continue as a bloc.

Spahn said the ministry was bracing for a variety of scenarios, depending on the outcome of the British referendum on June 23, and the extent of the market reactions. He declined to give any details about how the ministry would respond.

A vote to leave the EU would mean that Britain would have to renegotiate trade agreements with the rest of Europe, and it would likely have to accept less preferable terms, Spahn said.

"It has to make a difference if you're part of the family or just a neighbor," Spahn told ARD.

Spahn said he hoped Britons voted to stay in the union, but said the bloc needed to reassess its overall status regardless of how the vote turned out, given the depth of the current crisis.

However, the need to cooperate on issues such as combating terrorism and dealing with the migrant crisis demonstrated the benefits of acting as a larger European community, he said.

--reuters--