S&P confirms British rating while warning of dangers from Brexit

PUBLISHED : Saturday, 29 October, 2016, 1:43am
UPDATED : Saturday, 29 October, 2016, 1:43am

Standard & Poor’s maintained Friday its rating for Britain, having removed its coveted ‘AAA’ status after the June 23 EU exit referendum, and warned again over the impact of Brexit.

S&P said in a statement that Britain’s assessment remained at ‘AA’ with a negative outlook, meaning that the agency could lower the rating in the medium term.

“In our opinion, Brexit presents a significant risk to the UK’s track record of strong economic performance, and to its large financial sector in particular,” S&P said.

“The Leave result has also led to a less predictable and stable policy framework for the UK.”

It added: “The outlook remains negative, reflecting the continued institutional and economic uncertainty surrounding Brexit negotiations, and what arrangements will emerge post-departure.”

S&P also flagged uncertainty over the future of Britain’s membership of the single market.

“The recent decision to exit the European Union -- the destination for 44 per cent of the UK’s goods and services exports -- poses a potential risk to the UK’s national income, as well as its fiscal and external balances,” it said.

The agency added: “It is not clear if the EU will permit the UK access to the single market on existing tariff-free terms, or impose tariffs on UK products.

“Further arrangements regarding the export of services, including by the UK’s important financial services industry, are even more uncertain, in our view.”

Another Brexit blow: S&P and Fitch downgrade UK’s credit score amid referendum turmoil

Despite Brexit fears, official data showed this week that the British economy powered ahead in the third quarter with stronger-than-expected growth.

Gross domestic product expanded by 0.5 per cent in the third quarter.

Although a slight slowdown compared with growth of 0.7 per cent in the three months to the end of June, when Britain voted in a referendum in favour of exiting the European Union, it beat analysts’ consensus forecast for GDP growth of 0.3 per cent.