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OECD says Ireland, Luxembourg, Netherlands most hit by Brexit

Xinhua, June 2, 2016 Adjust font size:

The Organization for Economic Cooperation and Development (OECD) said on Wednesday that Ireland, Luxembourg and the Netherlands would be most hit by a potential exit of Britain from the European Union (EU).

In its latest Economic Outlook, the Paris-based think tank said EU members Ireland, Luxembourg and the Netherlands are "relatively highly exposed" to the British economy.

"In most of the highly-exposed economies, the shocks applied are between one-third and one-half of those in the United Kingdom, with investment and equity risk premia rising by 75 basis points at their peak and the interest rate spread by 34 basis points," it said.

But the OECD said Ireland would experience the biggest shock following a Brexit.

"Ireland is an exception, given the strength of its bilateral trade and financial linkages, with investment and equity risk premia rising by 100 basis points at their peak and the interest rate spread by 50 basis points," it said.

According to the OECD report, moderately exposed countries would suffer between one-quarter and one-third of the market impact Britain experiences. These include Austria, Belgium, Denmark, Germany, Finland, France, Greece, Spain and Sweden.

The report said the Czech Republic, Estonia, Italy, Hungary, Poland, Portugal, the Slovak Republic and Slovenia are relatively less exposed directly to Britain.

"The UK decision to exit could reinforce uncertainty about the future of the European Union and the Single Market. The resulting uncertainty would lead to more difficult financial conditions in other European countries," the OECD said.

By 2020, Britain's GDP could be over 3 percent below the level it might otherwise have been if it had remained in the European Union, with GDP in the rest of the European Union around 1 percent weaker than otherwise, it said.

By 2030, Britain's GDP could be over 5 percent lower than otherwise if exit had not occurred, it added.

Britain will hold a referendum on June 23 to decide whether it should remain in the EU. Endit