The direct economic effects on Central and Eastern Europe from a ‘Leave’ vote in the UK’s referendum on EU membership, set for June 23, would be “relatively minor,” according to Erste Bank.

In a report published on February 29, the Austrian bank noted that direct trade linkages to the UK amount to roughly 3-6% of total foreign trade of CEE countries, and therefore economic consequences would be limited.

“A somewhat stronger consequence would hit migrant CEE workers in the UK through the cut of social benefits and curbing the free movement of labour, but even this does not make it likely that most of these workers would lose their jobs or return to their home countries,” Erste writes.

Further fallout from a Brexit, however, could include a widening divide between the Eurozone and non-Eurozone countries (core-EU and non-core EU). That would likely trigger a discussion on the existence of the EU as a whole, which could in turn lead to strong market developments such as flows of capital towards safe havens, presumably meaning away from most of CEE.

Of course, public opinion in the UK is still leaning toward a ‘Remain’ vote, although the polls are narrowing. However, Erste suggests that even holding the discussion about an EU exit - and the offers made to the UK to stay, such as tougher controls on the free movement of labour and cuts in social spending for migrant workers - is already causing some negative developments for CEE.

“More countries on the continent have already flagged their intention to curb social spending on migrant employees from CEE,” the bank notes.

Looking at the individual countries in CEE, Erste speculates about what aspect of a possible Brexit would have the largest effect.

In Croatia, the effects of Brexit would be limited by the British market making up just 2% of total exports. On top of that, employment restrictions for Croatian workers are still in force, and therefore remittances do not comprise a very important source of income in Croatia.

“However, we see two relatively indirect effects that should be mentioned,” Erste writes. “Firstly, British tourists are becoming more important (in 2015, arrivals and overnight stays from Britain went up by 14% and 15%, respectively), and they are known as one of the largest per capita consumers in tourism, so potential economic distress and weakening of the pound could negatively affect tourist arrivals from Britain. Secondly, for Croatia, the Brexit scenario may increase uncertainty concerning EU fund perspectives and may result in increasing EU skepticism, which, given the current phase of EU membership, are important concerns for Croatia.”

For the Czech Republic, the issue of a Brexit is of greater importance, because Czech exports heading to the UK made up 4.5% of GDP in 2015, according to the report. On top of that, around 42,000 Czechs work in the UK, although Erste points out that it “[does] not expect Brexit to have an enormous impact on the employment of Czechs in the UK, as hotel and catering positions are some of the most sought-after jobs in Britain.”

There could, however, be a knock-on effect on a so-called ‘Czechout’ from the EU. “Czech Prime Minister Bohuslav Sobotka said… that if Brexit happens, the topic of leaving the EU may be on the agenda in the Czech Republic," the report reads. "However, we think that this should be understood as a warning against any wave of nationalism that could be launched by Brexit. Any post-Brexit market turmoil would hit the EMU more than the Czech economy, in our view, as the Czech banking sector has high liquidity, a high share of primary deposits and a high capital adequacy ratio."

In Hungary, as a net recipient of EU funds and one of its biggest beneficiaries, Erste suggests any Brexit would have an adverse impact on the economy and growth through the decline in investment dynamics, as well as affecting remittances from the significant number of migrants working in the UK. The rough estimate is that 0.7% of the Hungarian population is working in Britain.

On top of that, Hungary would lose an important ally in the EU. “It is our view that the indirect impact of Brexit could be as damaging to Hungary as the indirect impact, because the new status quo within the European Council and the uncertainties of future policies also pose risks,” the bank notes.

Poland, as the biggest source of EU migrants, would be the most affected by a Brexit. “Stricter emigration rules and limitations on entering the British labour market could reduce the flow of remittances, thereby negatively affecting the wealth of the families of emigrants (all remittances accounted for 1.3% of GDP in 2014, which equals the size of the ‘PLN 500 per each child’ program,” the report reads.

Erste’s Romania analyst worries that a Brexit worst-case scenario would involve new restrictions that would force the 170,000 or so Romanians working in UK to either return home or relocate to other EU countries. “This could create a major disruption in the flow of money, as Romanian expats send home more than €500mn a year (0.3% of GDP), according to our estimates,” Erste points out.

In terms of trade, a downturn in UK from a Brexit could also dent Romanian exports, especially machines & transport equipment, which comprised 46% of total exports to the country. “The UK is the fifth-largest destination for Romanian exports, accounting for slightly more than 4% of the country’s overall exports (or €2.3bn),” the analyst worries.

Erste doesn’t see any direct economic effects on Serbia's economy; by far the biggest potential risk of Brexit in Serbia would be political. “If Brexit initiates a wave of Euro-skepticism and shakes the whole ‘EU project’, we could see strengthening of anti-EU sentiment in Serbia, which is formally on the EU path, but strong connections with Russia and a relatively EU-skeptic public are still making that path somewhat fragile,” the Austrian bank forecasts.

Slovakia’s trade with the UK accounts for just 5.5% of all Slovak exports and 1.6% of imports. However, its main trading partner, Germany, happens to be the UK’s second-biggest trading partner. “Slovakia could thus feel the second-round effects of Brexit via Germany,” Erste suggests.

Meanwhile, the bank notes that Slovenia’s foreign affairs minister stated a few days ago that Brexit would have negative economic consequences for many EU countries, including Slovenia.

“Such a rationale is in line with the conclusions of the publication ‘Dynamic effects of Brexit for all EU countries,’ which shows that Slovenian per capita income would suffer at by least 0.2% and by up to 1.9% in a more severe scenario, when taking into account direct and indirect production chains and sector links,” Erste concludes.