UK vote raises longer-term risks to Eastern Europe

The UK’s vote to leave the EU in yesterday’s referendum is likely to cause further turbulence in Central and Eastern European (CEE) financial markets in the coming days and weeks. As things stand, we think that the vote will have a smaller near-term economic impact on CEE than many seem to fear. But medium-term risks are building, particularly if Brexit were to embolden populists within the region, or lead to a broader fragmentation of the EU itself.