Ireland faces worst economic blow of all eurozone countries from Brexit - ING
The eurozone is set to suffer a substantial economic blow if Britain votes to leave the European Union, economists have warned.
And Ireland would see the biggest economic contraction in the event a Brexit, with cumulative growth down by as much as 1.1pc at the end of 2017, following this summer's referendum, said ING.
The adverse impact on Ireland is almost as much as that estimated for the UK economy which could shrink by 1.2pc until 2017.
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Malta, the Netherlands, Belgium and Luxembourg would also a suffer substantial hit from a British exit with growth lower by between 1pc and 0.7pc.
Up to 0.3pc of eurozone GDP will be wiped off the single currency's 19 economies in less than two years, Dutch bank ING calculates, noting that any prolonged political fallout from a Brexit could cause much "greater and longer lasting" damage to the bloc in the long-term.
Germany - the eurozone's largest economy - is in line to suffer a 0.5pc GDP contraction, with France at 0.4pc and Italy the least affected at -0.3pc.
Falling exports, weaker investment and a shift in the direction of EU economic policy away from free market reforms, would all combine to create a sizeable adverse shock to the continent, said Peter Vanden Houte and Carsten Brzeski, economists at ING.
In the short-term, a sharp depreciation in the pound - which could fall as low as €0.90 against the euro - would crimp eurozone exports to the UK, with small trading nations such as Ireland, Belgium and the Netherlands suffering the biggest losses to trade.
Trade with Britain is responsible for creating around two million jobs across the eurozone, accounting for 1.5pc of all employment, said the Dutch bank.
A weaker pound would also see profits of European companies fall when converted into euros and confront eurozone businesses with the possibility of higher trade tariffs if bilateral trade deals with the UK are not concluded within the two-year time frame awarded by Brussels after a 'Leave' vote, they said.
The Dutch bank's calculations are also much more severe than rival estimations of the economic consequences of a Brexit for Europe. Germany's Bertelsmann Foundation forecasts a Brexit would only lower eurozone GDP by as much as 0.36pc but stretched out until 2030.
But highlighting the political turmoil unleashed on the EU after the summer referendum, the report said a messy exit for the UK meant the risk of a "broader fragmentation of the European Union has therefore increased, with potential negative economic consequences in the longer run".
"By agreeing to a ‘deal’ the rest of Europe has made itself vulnerable to copycats: other countries may also ask for exceptions and national special treatment" said Mr Vanden Houte.
ING's warning comes as Swiss asset-manager Unigestion said a Brexit would prove "more detrimental for the European Union and the eurozone than for the UK".
Brexit would be “first actual step back in the European construction process that started in 1957", said the Geneva-based fund which manages £16.3bn in assets.
“If there is one consequence investors should anticipate out of the Brexit situation, it would be renewed questioning of the viability of the European construction as it sits today", said Unigestion.