Irish PM warns punitive Brexit terms could inflame anti-EU sentiment

DUBLIN, July 18 (Reuters) - Ireland (Other OTC: IRLD - news) 's premier urged fellow European Union leaders on Monday not to impose harsh terms on Britain as punishment its vote to leave the bloc, warning such an approach could inflame anti-EU sentiment across the continent.

Britain's shock June 23 referendum "out" vote has sparked debate in Europe about how to prevent other members following suit, with some fearing a favourable deal for Britain could tempt others to leave.

But Irish Prime Minister Enda Kenny said a punitive settlement for Britain could be equally destabilising.

"Any perception that the UK is being punished for its democratic decision to exit the European Union will only further inflame the growing populist backlash against European integration," Kenny said in a speech to academics.

"It (Other OTC: ITGL - news) is in nobody's interests for the UK and the EU to have anything but the best possible future relations," he said, according to a transcript published by his office.

Ireland will cooperate closely with other member states anxious to see "a constructive and respectful outcome", he said.

The Irish Republic is keen to avoid restrictions on the free movement of goods or people arising from Brexit, fearing this would undermine Northern Ireland's peace process and damage trade across its border with the British province.

A majority of voters in Northern Ireland, as well as in Scotland, voted to remain in the EU, unlike much more populous England. As a whole, Britain voted by a 52 to 48 percent margin to leave the bloc.

Britain accounts for 16 percent of Ireland's exports, but this rockets up to 44 percent when foreign-owned firms operating out of Ireland are excluded.

Northern Ireland will represent the only land frontier between Britain and the EU once Britain leaves.

Theresa May, who replaced David Cameron as British prime minister last week, said on June 30 that details of future Irish border arrangements will hinge on the outcome of Brexit talks with Brussels. But she noted that there had been a common travel area with the Irish Republic since the 1920s.

(Reporting by Conor Humphries; editing by Mark Heinrich)