Moody’s downgrades UK credit rating in wake of EU exit vote

The ratings agency Moody’s has downgraded the outlook for the UK’s credit rating from stable to negative because of the prolonged period of uncertainty that will inevitably follow Britain’s vote to leave the European Union.

Moody’s said it had factored in “the unpredictability of British decision-making” and the likelihood of lower economic growth. This would undo any savings the UK might hope to make from not having to contribute to the EU budget, it said, warning that: “Over the longer term, should the UK not be able to secure a favourable alternative trade arrangement with the EU and other countries, the UK’s growth prospects would be materially weaker than currently expected”.

Standard & Poor’s, another ratings agency, has confirmed that it is “reviewing” the UK’s AAA credit rating amid fears that Britain’s growth performance, external funding, and the public balance sheet are all going to suffer.

Ahead of the vote, Standard & Poor’s said: “A vote to leave would, in our view, deter investment in the economy, decrease official demand for sterling reserves, and put the U.K.’s financial services sector at a competitive disadvantage compared with other global financial centres.”