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Britain's debt status put on notice by S&P over EU referendum | |
(about 9 hours later) | |
The Government’s plans to hold a referendum on Britain’s EU membership prompted the credit-rating agency Standard & Poor’s to put the UK’s AAA sovereign debt on “negative” status last night. | The Government’s plans to hold a referendum on Britain’s EU membership prompted the credit-rating agency Standard & Poor’s to put the UK’s AAA sovereign debt on “negative” status last night. |
“There are important risks to the UK’s longer-term economic prospects should it leave the EU,” S&P said, pointing to the impact on financial services and exports.It cut the UK’s status from “stable” and added that there was a one-in-three probability the UK will lose its AAA rating within the next two years. | “There are important risks to the UK’s longer-term economic prospects should it leave the EU,” S&P said, pointing to the impact on financial services and exports.It cut the UK’s status from “stable” and added that there was a one-in-three probability the UK will lose its AAA rating within the next two years. |
S&P is the only agency that still has the UK pegged as an AAA borrower. Both Moody’s and Fitch downgraded Britain in 2013 amid signs that the national debt was not falling. | S&P is the only agency that still has the UK pegged as an AAA borrower. Both Moody’s and Fitch downgraded Britain in 2013 amid signs that the national debt was not falling. |
“A possible UK departure from the EU raises questions about the financing of the economy’s large twin deficits and high short-term external debt,” S&P said. | “A possible UK departure from the EU raises questions about the financing of the economy’s large twin deficits and high short-term external debt,” S&P said. |
It added that the referendum was a sign that UK economic policymaking was being influenced by party politics, with David Cameron agreeing to the referendum to contain the rise of Ukip and to unite his own party. | It added that the referendum was a sign that UK economic policymaking was being influenced by party politics, with David Cameron agreeing to the referendum to contain the rise of Ukip and to unite his own party. |
S&P outlined a scenario under which it would downgrade the UK: “We could lower the ratings if ... our concerns about the adverse shifts in the political environment become more tangible, especially if we were to discern negative implications for investment and growth.” | S&P outlined a scenario under which it would downgrade the UK: “We could lower the ratings if ... our concerns about the adverse shifts in the political environment become more tangible, especially if we were to discern negative implications for investment and growth.” |
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