Cyprus will be hard hit by Brexit, KPMG says

Cyprus will be among the countries hardest hit from deteriorating relations between the UK and the European Union post-Brexit, new research from KPMG has shown.

KPMG’s chief economist Yael Selfin told CNBC that smaller economies – countries with which the UK has a large trade surplus – will have the greatest interest in securing a good deal when negotiations are scheduled to get underway at the end of this month.

These include Cyprus, the Republic of Ireland, Malta and Luxembourg.

According to the Centre for Economic Policy Research, an economic policy think tank, Ireland, Cyprus and Malta are major net importers of UK goods, but are almost insignificant in UK imports.

Citing KPMG, CNBC said the UK is one of the largest export markets for both Ireland and Luxembourg, accounting for 14.1 per cent and 10.1 per cent of Gross Domestic Product (GDP) respectively.

Larger economies, such as Germany and France, had significantly less to lose from the possible implementation of trade tariffs on the UK.

The largest number of British citizens can be found in Spain (over 300,000), Ireland (250,000), France (over 185,000) and Germany (over 100,000), based on UN 2015 data estimates.

“While a departure of EU workers from the UK labour market could prove a positive for the domestic economies of these countries, with more people potentially returning home to work; those countries which are dependent on UK workers or remittances from the UK could be harder hit,” Selfin told CNBC.

“For many Eastern European countries, protecting the workers in and remittances from the UK may be the most important priority, and countries such as Luxembourg, Malta and Cyprus rely on British workers.”