Fitch, S&P Global maintain UK’s ‘AA’ rankings

NEW YORK: Ratings agency Fitch on Friday maintained Britain’s long-time “AA” debt rating, but warned of risks connected to a potentially difficult Brexit transition.

Concerns are mounting that Britain will exit the European Union (EU) in March without a deal in place with Brussels, an outcome seen as a worst-case scenario that would have a disastrous impact on the economy.

“In Fitch’s view, an intensification of political divisions within the United Kingdom, about both the aspects of the UK’s withdrawal from the EU and the framework for future EU-UK relations, has impeded progress in the Brexit negotiations and increased the likelihood of an acrimonious and disruptive ‘no deal’ Brexit,” said the ratings agency.

“Such an outcome would substantially disrupt customs, trade and economic activity, and has led Fitch to abandon its base case on which the ratings were previously predicated.

“Uncertainty around the Brexit process is weighing on economic growth prospects, in our view,” said Fitch, adding that Britain’s gross domestic product could fall to 1.3 per cent from last year’s 1.7 per cent.

Meanwhile, S&P Global Ratings maintained its “AA” rating for Britain’s sovereign debt, along with a “negative” outlook.

“The ratings are constrained by the uncertainty regarding the UK’s exit from and future relationship with the EU, which in our opinion will have important implications for its economy, the country’s ability to attract inflows of capital and labour over time, and its public and external finances,” said the global ratings agency.