‘Brexit’ would be negative for the UK, ratings companies say
A UK exit from the European Union would be negative for the British economy and its standing among investors, according to Fitch Ratings and Moody's Investors Service.
Moody's said it would put the UK on notice for a possible downgrade if Britons vote to leave the bloc in a referendum on June 23. Fitch said uncertainty in the event of a so-called Brexit would hurt business confidence and curtail investment. Britain is rated Aa1 at Moody's and AA+ at Fitch, both the second-highest investment grade. "A decision to leave the EU would be credit negative for the UK," Kathrin Muehlbronner, a senior vice-president at Moody's, said in an emailed statement on Monday. "The economic costs of a decision to leave the EU would outweigh the economic benefits."
The pound fell the most since the banking crisis on Monday after London Mayor Boris Johnson became the highestprofile figure to say he'll campaign to quit the EU. The decision by one of the UK's most popular politicians marks a setback for Prime Minister David Cameron's case for staying in the world's biggest trading bloc. A vote to exit "would likely lead to a prolonged period of uncertainty, which would negatively affect investment," Moody's said. "It would also place a significant burden on policy makers who would have to renegotiate the UK's trade relations with the EU and other countries and regions, as well as reconsider other areas such as regulatory and immigration policies."
With polls disagreeing on the outcome of the June referendum, concerns are also resurfacing over the possibility of Scotland's secession from the UK in the event of vote to leave the EU.