Moody’s: Ireland most exposed to no deal Brexit

By Eamon Quinn

Ireland along with three other EU countries are the most exposed to the UK crashing out of the EU without any deal, Moody’s Investors Service reiterated in a report, as the UK government published a final huge batch of advice to businesses to plan for that worst outcome.

EU countries including Ireland, the Netherlands, Cyprus, and Malta “could experience negative consequences” because of the strong links with the UK, the ratings firm said.

“The trio of Ireland, Cyprus and Malta share the strongest links with the UK through supply chains,” Moody’s said.

“In particular, Ireland sources nearly half of all imported intermediate goods for production processes from the UK. Following Luxembourg, Ireland and the Netherlands have the most substantial flows of funds. Portfolio investments are most pronounced in relation to Ireland, while foreign direct investment positions vis-a-vis the Netherlands are a primary driver of those financial linkages with the UK,” its report said.

On the UK exiting without a deal, Moody’s said: “The UK’s withdrawal from the EU without an agreement to replace existing arrangements — a risk that has risen materially in recent months — would damage the UK economy and be credit negative for a range sectors and debt issuers in the UK and Europe.”

“We still think the UK and the EU will eventually reach an agreement to preserve many, but not all, of their current trading arrangements, particularly around trade in goods,” said Colin Ellis at Moody’s.

“However, we believe the prospect of the UK leaving the EU without any agreement has risen materially,” he said.

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