Ireland and Luxembourg to be worst hit outside UK if Brexit passes
OECD report reviews the annual economic outlook, predicting 3% drop in British GBP
- Those economies most closely linked to Britain would suffer the most
While the possible risks of a Brexit on the UK economy are well documented, what would happen to other European nations if the referendum on June 23rd decides to ditch the European Union?
Outside Britain, Ireland and Luxembourg would be the most negatively affected by their exit from the EU. According to the Organization for Economic Cooperation and Development's (OECD) annual economic report, Ireland would experience the biggest shock following a Brexit, with investment and equity risk premia rising by 100bp and the interest rate spread by 50bp.
According to the report, many other countries are highly exposed to the threat of Brexit. These include Luxembourg, the Netherlands, Switzerland and Norway. They would face a possible dip of between a third and half a percent.
Moderately exposed countries include Austria, Germany, France and Spain. The follow on effects of economic trouble in Europe could well end up affecting the majority of the economies in the world.
Each country’s exposure to the UK economy was determined by the UK imports and direct and portfolio assets invested in the UK as a proportion of GDP, as well as the relative intensity of Google searches for Brexit in that country.