Ratings agencies rip into UK's credit score after Brexit vote

Mon Jun 27, 2016 6:08pm EDT
 
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By Andy Bruce

LONDON (Reuters) - Britain suffered further blows to its economic standing on Monday as two top ratings agencies downgraded its sovereign credit score, judging last week's vote to leave the European Union would hurt its economy.

Standard & Poor's stripped Britain of its last remaining top-notch credit rating, dropping it by two grades from "AAA" to "AA" and warning more downgrades could follow.

Fitch Ratings also downgraded its ranking for Britain's creditworthiness by one notch, and similarly said more cuts could follow.

The ratings agencies effectively added a rubber stamp to the market's view of the Brexit vote, as sterling tanked to a 31-year low against the U.S. dollar on Monday and stock markets fell for a second trading day since the referendum last Thursday.

It was the first time S&P had chopped an AAA-rated sovereign credit rating by two notches in one move.

"In our opinion, this (referendum) outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the UK," S&P said in a statement.

Finance minister George Osborne said on Monday the British economy was strong enough to cope with the volatility caused by Thursday's referendum.

But the vote has plunged the country into a political crisis, with the ruling Conservative Party looking for a new leader after Prime Minister David Cameron said he would stay on until October, delaying the launch of negotiations with the EU and leaving the country's economic prospects under a cloud of uncertainty.   Continued...

 
A British flag flutters in front of a window in London, Britain, June 24, 2016 after Britain voted to leave the European Union in the EU BREXIT referendum.       REUTERS/Reinhard Krause