The European Union's chief concerns over Britain's vote to leave the
group are political but losing its second-largest economy will have a
huge economic impact as well.
Below are some of the main economic risks
and benefits for the EU's remaining 27 members.
BUDGET/ECONOMY
Other members will have to fill in at least some of the shortfall from a lack of its contributions.
Britain's
total contribution to the EU budget for 2016 has been set at 19.4
billion euros ($21.4 billion), including its rebate and customs duties.
It receives about 7 billion euros, mainly agricultural and regional
subsidies, leaving a gap to fill of just over 5 % of the total EU
budget.
Germany, the EU's largest member, would inevitably have to
provide the most extra cash. Germany's Ifo institute estimates that
would be 2.5 billion euros.
UniCredit says there would be
manageable negatives for the euro zone, with a trade impact, a financial
flight to safety and uncertainty possibly leading to tighter financial
conditions and postponed investment. It would revise down its 2017
forecast for GDP to 0.5-1.0% from the current 1.6%.
TRADE
The rest of the European Union has a
trade surplus of around 100 billion euros in goods with Britain, while
Britain exports some 20 billion euros more in services than it imports,
the same gap as for financial services.
Many economists forecast
Brexit would at least temporarily reduce UK growth, uncertainty hitting
domestic demand and weakening the pound, with a resultant impact on EU
goods exports to Britain, which make up some 2.6% of rest-EU GDP in
2014.
A UK "demand shock", linked also to a possible
reintroduction of import tariffs, of 10% could lead to a reduction of
rest-EU GDP by 0.26%.
Brexit campaigners say the EU would want to agree a free trade deal with Britain even if the country left the bloc.
However,
Oliver Schulz, an economist at Citi, reasons that could play more into
the hands of the EU given there tends to be more focus in trade deals on
goods than on services, and financial services in particular.
Switzerland, where financial services are a larger share of GDP than
in Britain, has no general access to EU financial service markets and
runs a financial services trade deficit with the bloc.
The EU's main service export to Britain, tourism, is unlikely to be affected.
INVESTMENT
The
United Kingdom is consistently the largest recipient of foreign direct
investment in the European Union, according to UNCTAD data, with an
average of some $56 billion per year in the 2010-2014 period. EU
partners supply just under half of this.
There is a risk some FDI would be diverted to other EU countries if Britain lost access to the EU single market.
MIGRATION
One of the main arguments for Brexit
campaigners is to limit migration of workers from other EU countries,
even though both Norway and Switzerland have had to accept free movement
of people in return for access to EU internal markets.
If Britain
did cap immigration, it could have a negative impact on eastern
European countries, from which some 1.2 million workers were in Britain
in late 2015.
The impact could be most acute in the countries with
the most citizens in Britain - Poland (853,000 in 2014), Romania
(175,000) and Lithuania (155,000)
By contrast, other affluent
western European countries, such as Germany, could as a result see
higher inflows of EU migrants. This might be beneficial economically, if
politically difficult.
