Cyprus faces strong Brexit headwinds: S&P

NICOSIA, April 1 (Xinhua) -- Cyprus ranks fourth among the countries to be hit the hardest by Brexit, according to a latest survey published by the international ratings agency Standard poor.

The survey said that Ireland, Luxemburg, the Netherlands and Cyprus are the top four countries most susceptible to the aftershocks from Brexit.

Standard poor's said they had prepared their "Brexit Sensitivity Index" based on measurements of goods and services exports to the United Kingdom, bidirectional migrant flows, financial sector claims on UK counterparties on an ultimate risk basis, and foreign direct investment in the United Kingdom.

"With its large tourism, auditing and financial sectors, and historical connections to the UK, Cyprus remains close to the top three economies most exposed to Brexit," the survey stated.

The United Kingdom is Cyprus's main source of tourists, accounting for about one third of the close to 4 million tourists visiting the eastern Mediterranean island annually.

Cyprus is home to about 80,000 British nationals, most of them pensioners, who live and spend their income on the island.

It also hosts two military bases, which have British Overseas Territory status. These cover 3 percent of Cyprus's land area, and up to 2,500 people derive their income directly from working there.

Standard poor's report also said that large numbers of Cypriot nationals live and work in the UK. Their remittances amount to 0.2 percent of Cyprus's gross domestic product (GDP).

"Cyprus is no stranger to external shocks, having managed to retain much of its business services sector and to recover economically from the 2012-2013 financial crisis and sovereign default," the survey noted.

But it added that even so, Brexit could create headwinds for its economy, given the importance of migratory, export and financial links between the two countries.

In parallel to the Brexit-related dangers, the Cypriot economy is currently facing a possible big drain on its government's finances in the form of a restitution of salary and pension cuts and other pecuniary measures taken as a way to deal with the 2013 crisis.