Irish Economy To Be Hurt By Brexit In The Near Term, Says S&P

The British decision to exit the European Union will have no immediate impact on neighbor Ireland's sovereign rating, but it will have a negative effect on the Irish economy in the near to medium term, Standard & Poor's said Friday. The U.K. accounts for about 12.4% of Irish goods and 20% of Irish service exports, well below the 50% level seen when the two countries first joined the then European Community in 1973. "However, the sectors that serve the U.K. market are, on average, more labor intensive and any negative shocks could damage the mending Irish labor market," the agency said in a statement. Other risks include a weakening of the financial service sector, and the ripple effect of lower demand from the rest of the EU. "Furthermore, many aspects of Britain's relationship with the EU, and therefore the U.K.-Irish relationship, would be unclear, increasing uncertainties related to trade and investment between the two countries," said S&P. "We do not believe the potential relocation of some U.K. businesses to Ireland would fully offset the overall negative impact of Brexit in the short to medium term."