Moody’s cuts UK credit outlook after EU exit
Moody's, a leading credit ratings agency, has downgraded Britain’s credit standing in the wake of the UK’s vote to exit the European Union (EU).
Moody’s cut the British government's bond rating from stable to negative on Friday, a day after the UK voted to leave the 28-member bloc in a historic referendum.
The ratings agency also warned that the UK’s economic growth will weaken as its fiscal strength loses steam.
"Moody's expects a negative impact on the economy unless the UK government manages to negotiate a trade deal that largely replicates its current access to the single market,” said the agency.
"However, at the moment there is substantial uncertainty over the type of trade agreement that could be achieved," Moody's added.
The agency, however, said the UK would remain on the AA+ rating, three years after it cut Britain's AAA rating.
This is while in its annual British economic outlook published Saturday, the International Monetary Fund (IMF) called Brexit the “largest near-term risk” to the country’s economy, warning that leaving the EU would cause “negative and substantial” impacts.
The worst case scenario for the UK, according to the IMF, would include a significant surge in inflation combined with up to 5.6 percent decline in 2019 economic growth.
UK’s decision to exit the EU also caused the British pound to collapse. The pound fell to its lowest level against the US dollar since 1985 as the global markets reacted to the results.
Membership of the European Union has been a controversial issue in the UK since the country joined the then European Economic Community in 1973.
The UK vote has already drawn varying reactions from leaders across the world, with many EU officials expressing concern over Britain’s decision to leave the bloc, while others have warned of the repercussions of remaining in the union.
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