Brexit vote sees UK credit rating downgraded from AAA to AA by Standard & Poor

Credit agency describes vote to leave as 'seminal event'

Sunday 03 July 2016 18:45
Chancellor George Osborne attempted to address financial concerns in a speech on Monday
Chancellor George Osborne attempted to address financial concerns in a speech on Monday

The global credit agency Standard & Poor has downgraded the UK's credit rating from the top rating of AAA to AA, following Britain's historic vote to leave the EU.

The long-term sovereign credit decrease represents a two-notch fall, and follows the UK's credit outlook being adjusted from "stable" to "negative" by Moody's.

It said in a statement: "In our opinion, this outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the UK.

"We have reassessed our view of the U.K.'s institutional assessment and now no longer consider it a strength in our assessment of the rating.”

S&P said the disparity of voting within the UK, with both Scotland and Northern Ireland voting to remain, could cause "wider constitutional issues for the country as a whole."

It continued: "The negative outlook reflects the risk to economic prospects, fiscal and external performance, and the role of sterling as a reserve currency, as well as risks to the constitutional and economic integrity of the U.K. if there is another referendum on Scottish independence."

S&P's rating is a marker of how the UK is viewed by international investors, but it is not a change that is likely to carry too much sway with markets in the short term.

The value of the pound slipped almost 2 per cent on Monday morning as the EU referendum result reverberated around global markets.

A speech by the Chancellor George Osborne prompted a slight recovery as the stock market opened, with the pound trading 1.7 per cent down at $1.3497.

The pound sterling, which last week plunged to its lowest level since 1985, continued to fall as traders expected the British economy would take a hit.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

View comments