Republic of Ireland's 'A+/A-1' sovereign credit rating affirmed

Republic of Ireland's sovereign credit rating has been affirmed at 'A+/A-1' by S&P Global Ratings, which expected the new minority government to keep pursuing open and proactive economic policies and continue fiscal consolidation.

Moreover, thanks to the republic's rapid nominal gross domestic product (GDP) growth, S&P Global foresaw net general government debt falling below 80% of GDP in 2017. It noted that Ireland's recent economic performance had surpassed most euro-zone countries.

"The stable outlook balances our view of upside potential for the ratings if Ireland’s fiscal position continues to improve against risks associated with external factors such as a potential Brexit, or weaker global demand," S&P Global said.

The economic analysis did not factor a potential Brexit into the equation, but S&P Global did warn the impact of such an event on the Irish economy could likely be negative.

"In terms of direct trade relationships, the UK accounts for only around 12.4% of Irish goods and 20% of Irish service exports, well below 50% levels observed when both countries joined the European Community in 1973," it said in a statement.

"However, the sectors that serve the UK market are, on average, more labor intensive and any negative shocks could damage the mending Irish labor market."

The ratings agency said other negative economic risks associated with a potential Brexit could include the weakening of the UK's financial service sector, with which Ireland's financial service sector was closely linked, and the potential ripple effect stemming from lower demand from the rest of the EU.

"Furthermore, many aspects of Britain’s relationship with the EU, and therefore the UK-Irish relationship, would be unclear, increasing uncertainties related to trade and investment between the two countries.

"We do not believe the potential relocation of some UK businesses to Ireland would fully offset the overall negative impact of Brexit in the short to medium term."