‘Brexit’ would be neg­a­tive for the UK, rat­ings com­pa­nies say

The Pak Banker - - MARKETS/SPORTS -

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.

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