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Lithuania vehemently refutes S&P report, possible Brexit aftermaths

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Linas Jegelevicius for the BNN

While the world – and Lithuania- are in the guessing game what the aftermaths of Brexit will be for the world, Europe, UK itself and each member of the already one-member-less 27 member bloc, Standard & Poor’s, an American financial services company, knows it best.

According to S&P, Lithuania would be the most affected by Brexit among all Eastern European nations. Lithuania’s Ministry of Finance hastened to refute the international rating agency’s claim, saying it has «drawn misleading conclusions.»

An unexpected and unsubstantiated report

Lithuanian analysts that BNN spoke to for the article also were generally shrugging their shoulders in disbelief: «If you were to ask another similar company, you’d hear that Poland, Latvia or any other Eastern European country will be ill-affected most by it,» quipped Lauras Bielinis, a famous Lithuanian analyst.

Still, the S&P report has stirred some ripples across 11 Eastern European countries, Turkey and Russia- all of which were analysed by the Americans.

Responding, the Lithuanian Ministry of Finance, issued the statement: «In light of the global analytical forecasts, Lithuania would not be among the most exposed countries, if all EU member-states were rated. Many analysts agree that the biggest Brexit consequences would be felt by Ireland, the Netherlands, Belgium, Latvia, Malta, Cyprus and Luxembourg. Germany would also be affected, however, the effect would be lower than the listed countries.»

Illogical statements?

Furthermore, the ministry said the Standard & Poor’s rating features «illogical statements» in connection to Brexit effects on Lithuania’s exports, although Lithuania’s export-GDP ratio is at 2.5 per cent, as compared to 3.2 per cent in Estonia and 3.9 per cent in Latvia.

«Nevertheless, the countries are not listed as being exposed,» notes the release.

It also emphasizes that Lithuania was also «misleadingly listed» because of the remittances made by emigrants.

«Our preliminary calculations suggest they could total at about 300 million euro in 2015 or about 0.8 per cent of the GDP, which is considerably less than specified in the S&P analysis (1.2 per cent). Furthermore, if the Lithuanian citizens living in the UK were to move elsewhere because of Brexit, they would probably move to Ireland and Norway. This means that the remittances of those working abroad would continue flowing to Lithuanian households,» the Ministry of Finance said.

It also questioned the number of Lithuanian emigrants living in the UK published by S&P. According to the ministry, they total is 5.1 per cent, not 5.4 per cent, of the Lithuanian population.

Impact will be minimal

«So to wrap it up, the report is misleading facts-laden and it bids noting apocalyptic to the Lithuanian economy. Standard & Poor’s has, in fact, not asked us for any official data, thence the misleading conclusions,» says Algimantas Rimkūnas, the finance vice-minister.

In his words, the forecast on Brexit’s impact on Lithuanian economy is «minimal» and there will be no direct impact in short-term.

«It is not tangible and will not be such in the near future,» he underlined.

The US financial ratings company‘s report in June found Ireland as the country to be the most affected by Brexit aftershocks.

Then, with 20 EU countries’ migrant flows, exports to the UK, foreign direct investment here and financial sector claims on UK institutions analysed, Canada and Switzerland were the only non-EU countries included the index, which also featured Nordic countries and major European players such as France and Germany.

«Ireland in the forecast is to be hardest hit due to its shared history and common border with the UK, which has led to the significant trade and huge migration between the countries,» the June report read.

Lithuanian analysts baffled

«It is a sheer bullshit to claim that Lithuania, not any other European country and the United Kingdom first of all will be most ill-affected by aftermaths of Brexit,» Rimvydas Valatka, a renowned Lithuanian commentator, told BNN. «How can Lithuania’s economy be impacted so much if it, in its size, is no bigger that the Corwall County’s in the UK?»

He noted sardonically that S&P analysts may have been «overheated» in their heads when compiling the report.

The analyst also did not dare to speculate how the nomination of Theresa May to the post of the UK’s Prime Minister may affect the Brexit process.

«I reckon it will be in line with the EU laws outlining the mechanism. There is no simply other way,»he said.

Valatka called David Cameron «a downright idiot» who has been juggling the idea of UK referendum on the EU membership for the last couples of years.

«If not him, we would not have had the referendum and Brexit. The card of democracy has turned against him, ruining her political career,» Valatka said, adding, «There is always a possibility that some new idiots like him will pop up somewhere on the continent.»

New UK PM will have to turn ear to others

Lauras Bielinis, former advisor to President Valdas Adamkus and associate professor, downplayed the S&P report, saying that any other consultancy would have provided different results.

«I am sure that Poles, Latvians and any other Eastern Europeans have apprehensions that namely they are to be ill-affected by Brexit most,» he told BNN.

Asked about the arrival of Theresa May, Bielinis believes she will try to mitigate the adverse consequences of Brexit both within the United Kingdom and the European Union.

«But I am sure she will proceed with the procedures towards the country’s exit from the bloc,» he added.

Although the new PM was known as a staunch supporter of tough migration politics, Mrs. May will need to attune her position on emigration with the UK Parliament and the Queen, according to him.

«It might not be easy always. She will definitely have to turn ear to what they say,» he said.

Lithuania is not special in any way

Meanwhile, Vytautas Dumbliauskas, an analyst and associate professor, reasoned to BNN that Lithuania «in no way» is special or different in terms of the negative Brexit aftermaths.

«From that point of view, the Poles are the ones to feel the most palpable aftermaths of Brexit for a single reason: their UK community is the largest,» he said.

Mrs. May’s nomination, he believes, is the interference of «God himself».

«Look, when the United Kingdom is in trouble, a woman turns up at the helm of the country. You, sure, understand I have the legendary Margaret Thatcher in mind,» the analyst said.

Although the new PM is known for its tough stance on emigration, Dumbliauskas tends to disregard the concerns in the UK Lithuanian community.

«The country will do nothing without the foreign workforce, so she will have to deal with the reality,» he predicted.

New PM will have to listen to Queen

Vytautas Bruveris, a senior journalist at daily Lietuvos Rytas, says he is «sticking» with the position by the Lithuanian Finance Ministry, which says it will be «minimal.»

As for the new UK political leadership, he believes that the UK’s financial and political elite will be hammering out policies in the post-Brexit Great Britain.

«The new Prime Minister will definitely have to heed what they say,» Bruveris told BNN.

Ref: 111.111.111.3511


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