Ratings agency Fitch thinks Brexit will make Europe weaker, poorer and more populist
Europe could become weaker, poorer, more politically fractured and less secure if the UK votes to breakaway from the European Union, according to ratings agency Fitch.
"An exit from the EU by the UK would weigh on the economies of other EU countries and increase political risks in Europe," the group said in a new report out this morning.
Fitch said not only would the central EU budget take a hit as the UK's net contribution of £8.5bn could be wiped out, but populism, already on the rise across the continent, would be given an extra boost. The ratings agency said controversial party leaders such as Marine Le Pen, leader of the National Front in France, and Geert Wilders, head of the Dutch Party for Freedom, back Brexit.
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"Brexit could create a precedent for countries leaving the EU. It could boost anti-EU or other populist political parties, and make EU leaders more reluctant to implement unpopular policies with long-term economic benefits," Fitch said.
It also warned that the post-Brexit negotiations, which EU treaties allow at least two years for, "could exhaust the EU's time and energy and open up new fronts of disagreement between member states, distracting it from exiting priorities such as dealing with the migration crisis, Greece and the implementation of fiscal rules."
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The economic fallout of the UK leaving the EU would be "palpable" and most critically felt in Ireland and other small countries with close links to the UK including Malta, Cyprus and Luxembourg. Though Fitch also said France, Germany and the Netherlands would suffer as exports to the UK were likely to fall following a UK exit and a depreciation in sterling would make them more expensive for UK consumers.