Member states relying on finance as a revenue source are becoming increasingly concerned about Brexit, according to search data from Google. And with good reason: rating agency S&P has highlighted just how sensitive their economies are to the UK. EURACTIV France reports.
Ireland, Malta and Cyprus, three countries with very close historic ties to the United Kingdom, would be particularly deeply affected if the UK chooses to leave the EU. S&P’s Brexit sensitivity index sheds light on just how important this close relationship is for certain countries.
The rating agency based its findings on four pillars of the UK’s relations with its EU and international partners: exports, finance, foreign direct investment and migration.
Luxembourg would also feel the full impact of Brexit, due to its heavy reliance on financial services.
But for the three island nations – all former colonies of the British Empire – the negative effects would mainly be felt in higher export costs, as well as potential barriers to direct British investment on their territories.
The S&P study comes one week after the OECD predicted that Ireland, the Netherlands and Luxembourg would be the hardest hit if the UK chose to give up its EU membership.
Brexit tops Google search in Ireland, Malta and Cyprus
Data from Google Trends appears to confirm that the citizens of these countries are well aware of – and concerned about – their dependence on the UK.
After the United Kingdom itself, Ireland, Malta and Cyprus made the most Google searches about the referendum in the last week, ahead of Luxembourg and Switzerland.
Since the beginning of 2016, Malta, Luxembourg and Ireland have also searched for more information on the referendum than any other country outside the UK.
This data accurately reflects S&P’s sensitivity index, which shows that the “small open financial centers lead the list of sovereigns vulnerable to a UK decision to exit the EU”, according to S&P credit analyst Frank Gill.
In the case of Brexit, branches of British banks may reconsider their heavy presence in these countries. And the two years of negotiations that would between the EU and the UK could create uncertainty for exporters, as well as British investors.
Google’s Brexit search ranking also contains three former British colonies whose economies are much less sensitive to Brexit, but whose citizens appear genuinely concerned by the fate of their former rulers: Singapore, Hong Kong and New Zealand.
The member states with the closest ties to the United Kingdom also tend to be those with the biggest tax evasion problems, largely because their financial industries are over-developed compared to the size of their economies.
The preferential corporate tax regimes of Ireland, the Netherlands and Luxembourg were also built with the help of British banks and consultancies.