Ratings agency Moody’s said Britain’s credit-worthiness was now at greater risk after voting to leave the European Union, as the country would face substantial challenges to successfully negotiate its exit from the bloc.
Moody’s assigned a negative outlook to its ‘Aa1’ rating for British government debt after a Thursday referendum showed that a clear majority of Britons wanted to leave the EU, prompting Prime Minister David Cameron to announce he would resign.
“During the several years in which the UK will have to renegotiate its trade relations with the EU, Moody’s expects heightened uncertainty, diminished confidence and lower spending and investment to result in weaker growth,” the agency said.
Britain’s finance ministry and central bank had warned voters the country would face a major economic hit if it left the EU after more than 40 years as a member, and sterling on Friday fell to its lowest against the dollar since 1985.
Rival credit ratings agency Standard & Poor’s – the only major body one to still assign Britain a top-notch triple-A grade – said before Thursday’s referendum that Britain was likely to face a downgrade if it voted to leave, and Fitch Ratings said on Friday that the vote would be “moderately negative”.