Russian Economy Least Exposed to Brexit Risks in Eastern Europe - S&P

The Russian and Turkish economies are the least exposed to economic risks posed to Eastern Europe by the United Kingdom's looming departure from the European Union, while Lithuania and Latvia are the most exposed, S&P Global Ratings said.

MOSCOW (Sputnik) — Russia scored the lowest out of all European countries east of Germany on the S&P Brexit exposure ranking, having the least economic links to the United Kingdom, while Lithuania ranked as most exposed, the agency said in an analysis published on Thursday.

Exports to the United Kingdom make up 2.5 percent of all Lithuanian exports, UK contribution to EU funds and investment received by Lithuania comes to 1.5 percent, over 5 percent of the Lithuanian population lives in the United Kingdom and remittances from this diaspora make up 1.2 percent of Lithuania's GDP, according to the analysis.

The Latvian figures were marginally lower, followed by Hungary and Poland. Russia scored zero across all four parameters, while 0.1 percent of Turkey's GDP came from exports to the United Kingdom.

"Lithuania, Latvia, Hungary, and Poland are the most exposed if the U.K. leaves the EU, given their large migrant populations, remittances, trade links, and the importance of EU funds to finance investment… Turkey and Russia, on the other hand, appear the least vulnerable, due to their relatively lower migratory links with the U.K., and importantly they won't be affected by changes in the U.K.'s trade conditions with the EU, nor do they draw on EU funds," S&P said in the report.

The results of the UK referendum on EU membership have driven ratings agencies to forecast increased economic turbulence in Europe. On Friday, S&P downgraded the European Union's credit rating down from AA+ to AA with a stable outlook due to uncertainty in the wake of last week's Brexit vote in the United Kingdom's EU membership referendum. In late June, the agency also cut the United Kingdom's credit rating from AAA to AA, while Fitch downgraded the country's bonds to AA from AA+.

Both agencies gave the United Kingdom a negative outlook due to concerns Brexit might affect its economy, public finances and political stability.