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Brexit 'would hurt Ireland more than any other eurozone nation'

By Sarah Collins

Ireland would be hurt more than any other eurozone country by a UK exit from the EU, the head of the bloc's bailout fund has said.

Klaus Regling, head of the European Financial Stability Facility, said a Brexit would be "costly" for Ireland.

"For certain euro area countries, it would certainly be costly - particularly for Ireland," added Mr Regling.

"Half of their exports go to the UK, so for them it would be particularly difficult."

Mr Regling, who also heads up the eurozone's permanent bailout fund, the European Stability Mechanism (ESM), claimed a British exit would mainly impact the UK but would be "politically very unfortunate" for the wider EU.

"I very much hope there will be no Brexit," Mr Regling said in Luxembourg yesterday.

"It would mainly have a negative impact on the UK. It would certainly also weaken, politically, the EU as a whole."

He also told how negotiating the UK's exit from the EU would be time-consuming and could cause investor flight to continental Europe.

"It would take several years and during this several years there would be uncertainty," he added. "Investors might not want to go to the UK any more - they might go to the continent."

Mr Regling was one of the authors of a 2011 report on the causes of Ireland's banking crisis.

He described Ireland as one of the ESM's success stories, along with Portugal, Spain and Cyprus, which became the latest country to exit its bailout programme last week.

"If the ESM was not created in 2010, it's very likely that countries like Greece, Ireland and Portugal would have been forced to leave the euro area," he said.

Greece, the only eurozone country still under a bailout programme, is currently in talks with creditors from the IMF and EU to receive a further tranche of aid in exchange for a series of pension, tax and spending reforms.

Mr Regling said he hoped to conclude talks by the end of April, a deadline he admitted was "possible but not guaranteed".

The possibility of Greece defaulting on its debt was raised again over the weekend after Wikileaks published what it said was a transcript of a phone call between IMF officials discussing Greek progress on reforms.

IMF chief Christine Lagarde wrote to Greek prime minister Alexis Tsipras afterwards saying that she was "concerned as to whether we can indeed achieve progress in a climate of extreme sensitivity to statements of either side".

The IMF wants EU institutions to agree to take losses on the loans they made to Greece over the course of three bailout schemes. It also disagrees with the 3.5% of GDP primary surplus target Greece has to meet this year, suggesting it should be lowered.

EU institutions, however, are against further debt write-downs, but are discussing a possible further lengthening of maturities or deferral of interest.

Belfast Telegraph