BERLIN, Aug 28 (Reuters) - German Economy Minister Sigmar Gabriel said on Sunday that if Britain's exit from the European Union was badly handled and other countries followed its lead, Europe would go "down the drain".

"Brexit is bad but it won't hurt us as much economically as some fear - it's more of a psychological problem and it's a huge problem politically," he told a news conference, noting that the world was now looking at Europe as an unstable continent.

"If we organise Brexit in the wrong way, then we'll be in deep trouble so now we need to make sure that we don't allow Britain to keep the nice things, so to speak, related to Europe while taking no responsibility," he said.

(Reporting by Michelle Martin; Editing by Louise Ireland)