The Republic is at "the frontline" of states most exposed in the event of a British exit from the European Union, rating agency Standard and Poor's has found.
Ahead of the referendum on June 23rd, the agency analysed 20 countries and found the Republic, Luxembourg, Malta, and Cyprus were “on the frontline of economies susceptible to any trade and migratory aftershocks” from a decision by the UK to leave.
The analysis measured goods and services exports to the UK compared with domestic GDP, bidirectional migrant flows, financial sector claims on UK counterparties (including off balance sheet claims), and foreign direct investment in the UK.
"According to this methodology, Ireland and other small open financial centres lead the list of sovereigns vulnerable to a UK decision to exit the EU," said Standard and Poor's global ratings credit analyst Frank Gill in the report published today.
Who Has The Most To Lose From Brexit? Introducing The Brexit Sensitivity Index said that, of the 20 sovereigns most exposed, only two – Canada and Switzerland – are not EU members.
“Of course, our index does not reflect the potential political and market aftershocks of Brexit,” said the report. “However, it does distil the current real and financial economic links to the UK economy, the world’s fifth largest.”
The report also indicates which states might be more exposed to an unwinding of the UK’s standout macro feature: its current account deficit of 5.2 per cent of GDP, which is the world’s second largest in absolute terms at an estimated £96 billion.
“A rapid unwinding of an external imbalance of this scale, alongside currency volatility, would not take place without affecting the UK’s most important trading partners, and its most important creditors,” added Mr Gill.
Only a rating committee may determine a rating action and the report does not constitute a rating action.
