What a Brexit scenario could mean for European SSAs - Rabobank

Research Team at Rabobank, suggests that the United Kingdom (UK) heads to the polls on June 23 to vote on its continued membership of the European Union.

Key Quotes

“Should the UK decide to exit the Union, the immediate impact, at least from a legal perspective, should prove limited. This is due in large measure to the likelihood of a two year negotiation process, as stipulated by Article 50 of the Lisbon Treaty which outlines the steps to be taken should a member decide to leave the Union. Of particular note is that throughout this two year negotiation period existing treaties could be expected to remain in place. This suggests that there will be very limited material change in the immediate aftermath of a vote to leave. Article 50 stipulates;

“the Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.”

This does also tend to imply that the immediate impact in terms of the legal and structural implications for the UK and its near-term relationship with the EU, EIB and EBRD will prove limited. The decision to leave the Union would simply start the negotiation process between the UK as a shareholder in each of these institutions and the broader shareholder base.

The exception to this would most likely be the EBRD. Membership of the EBRD is not reliant on membership of the Union and as such, we would expect little material impact for the UK’s relationship with it. Where we do identify the potential for a meaningful shorter-term impact on the EU and the EIB is in terms of their credit ratings.”