S&P called the 20 most vulnerable countries in the event of a British exit from the EU


Ireland, Malta, Luxembourg and Cyprus will react to a British exit from the European Union the most painful, concluded the international rating Agency Standard & Poors (S&P). More likely, in the opinion of the Agency, Brexit will affect the economies of 20 countries, mostly EU members.

On the eve of a referendum on UK membership in the European Union S&P introduced a new index — the index of sensitivity to Brexit (BSI), which reflects the economic relations of real and financial sectors of the analyzed countries, with the British economy — the fifth largest in the world.

The basis of the calculations provided data on 20 States, on the economy, access to which, according to the Agency, will inflict a most serious blow. Of these, only two — Canada and Switzerland — are not part of the EU, and only one, Canada is not in Europe.

BSI aggregates, the volume of exports of goods and services in the UK in these countries compared to their GDP, bilateral migration flows, debt requirements (including off-balance sheet requirements) to counterparties from the UK and foreign direct investment in the country. Longer-term effects of the consequences of Brexit on the markets index does not reflect. And it does not reflect potential political risks.

Ireland, Luxembourg, Malta and Cyprus are the most vulnerable to a potential solution to the UK about leaving the EU in the field of trade and migration.

On the verge of isolation

Ireland was the most vulnerable to the consequences of Brexit country. Her figure — 3.5 points — exceeded the median value (0.8 points) four times.

Ireland, in the late 00’s has suffered severe socio-economic kriziz, the second consecutive year, becoming the fastest growing economy among the EU countries: in 2015, its GDP grew by almost 8%. Among the key growth factors were the increase in retail sales and an increase in exports coupled with a depreciating Euro. In 2015, the year exports jumped 20%, traditionally a key market is the UK.

Uncertainty about the new trade and immigration agreements between the UK and the EU will negatively affect the movement of goods, services and people across the border with the UK, said S&P.

Ireland more than any other country dependent on the British economy. According to one of the largest Irish banks — AIB, — exported to the UK 17% made in Ireland products. “The figure may seem small, but Ireland has a very large diversified export base”, — the report says the Bank “Brexit — update: downside risks for the UK and Ireland in 2016”. Exports to the UK is 18.5% of the Irish GDP. “Thus, to trade with the UK accounts for a total of 35% of GDP.” UK — the main importer Ireland, accounting for 33% of imports — more than from all EU countries.

Merron Economics analyst Alan McQuaid fears that a Brexit will be a consequence of the depreciation of the pound sterling to Euro and, accordingly, the drop in export revenues in 2016. His opinion is shared by the international Agency Fitch.

In addition, in the UK and Ireland formed a single labor market. According to the National statistical service of great Britain and the Department of economic and social Affairs, UN, bilateral migration flow between two countries is 17.2% of the Irish population is twice as high as in Cyprus (8.5%) and significantly higher than in southern European countries, including Spain (1%). In addition, the UK is the most popular tourist destination among Irish people.

AIB analysts fear that a British exit from the EU may be followed by the tightening of passport control, including the only land border between Ireland and Northern Ireland, and migration control. On the dependence of Ireland on great Britain because of the presence of the only land border points and the French Bank Societé Génerale.

However, Ireland and other European countries expect to benefit from Brexit. According to the Wall Street Journal, the Agency, IDA Ireland, dedicated to attracting foreign investment, plans to 2020 to create 10 thousand jobs in the financial sector in Ireland and Brexit might play in this hand. The Agency believes that a British exit from the EU may encourage financial institutions in other countries to look for other options for doing business, while Ireland can offer them skilled English-speaking employees and an attractive tax legislation.

The risk for Benelux

To host banks and investment companies calculate and Luxembourg, which was in third place among the most vulnerable to Brexit countries, according to calculations by S&P, with an index of 2.4 points. The second is Malta (almost 3 points).

In fourth place is another former British colony, Cyprus. As noted by S&P, Cyprus is a favorite vacation spot of British pensioners, and the aggregate wages of Cypriots working in the UK, equivalent to 0.6% of UK GDP. A British exit from the EU could have a negative impact on migration flows, exports and financial linkages between the two countries.

The ten most vulnerable from Brexit countries were Switzerland (5th place), Belgium (6), Netherlands (7), Spain (8) Norway (9) Sweden (10). Russia in the index of sensitivity to Brexit is not included.

At the same time, according to the Bureau of economic policy analysis of the Netherlands (CPB), the consequences of a British exit from the European Union hardest hit Ireland and the Benelux countries. The Netherlands, which are in the S&P is the seventh highest, against Brexit could lose €10 billion by 2030, analysts say CPB. They predict that depending on the scenario after the British exit from the EU, Dutch GDP will shrink by 0.9-2%, but without a new free trade agreement direct damage from Brexit could be around €575 per person.

Should the UK remain a member of the European Union, its citizens will decide on June 23.