[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][sc name=”Adsense”][sc name=”Adsense”]The UK’s credit rating could be downgraded again if the government fails to retain access to the single market as part of its Brexit negotiations. Britain’s current credit rating is still standing at AAA but is now only hanging by a thread. Top credit rating agencies are warning the public that their outlook is not good. Even top credit rating agencies such as Fitch and Moody have already cut the rating to AA+ and AA1 respectively. These cuts came about just days after the referendum was voted on. [sc name=”Adsense”]
Credit rating agencies called on the government to think very carefully about the issues that are on hand involving the Brexit negotiations. Because the UK will have to handle various complicated policy decisions specifically in the areas of regulation, global trade and immigration they risk damaging the UK’s fiscal and economic strength.
If the government fails to retain the single-market access as part of the Brexit negotiations it can lead to lower growth in Britain over the medium-term and damage the public finances. [sc name=”Adsense”]
Kathrin Muehlbronner, senior vice president at Moody’s, stated that in fact Britain’s credit rating would take a hit.
She said, “We would downgrade the UK’s sovereign rating if the outcome of the negotiations with the EU was a loss of access to the single market as it would materially damage its medium-term growth prospects.”
Fitch goes on to explain the factors that play into the fall of medium term growth.
They said that the medium-term growth is likely to be weaker “due to less favourable terms for exports to the EU, lower immigration and a reduction in foreign direct investment.”[sc name=”Adsense”]
There is also a negative outlook surrounding the UK banking system adding to the credit rating downgrade. Moody states that the negative outlook reflects “Brexit-induced uncertainties.” These uncertainties have placed pressure on the revenues, assets and profitability of UK Banks.
According to Jill Treanor and Katie Allen of the Guardian the Bank of England is expected to cut interest rates from already the historically low rate of .5% to possibly zero. In hope that this will stimulate consumer borrowing and put faith back into UK banks in the public eye to stimulate economic growth. On the other side this type of interest rate decrease has started to scare off some major foreign investors causing great stress on all UK banks.[sc name=”Adsense”]
- The Guardian, 2 November 2016 UK Risks Credit Rating Downgrade Due to Brexit Vote
[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]
