UK credit rating downgraded to 'negative' by Moody's amid Brexit recession fears

Turmoil: Britain's Brexit vote sparked financial turmoil when markets opened on Friday
Peter Macdiarmid/Getty Images
Jamie Bullen25 June 2016

The UK’s credit rating outlook has been downgraded to “negative” in the wake of Britain’s shock vote to quit the EU.

Credit ratings agency Moody’s warned Britain’s economic growth will be weaker after the Brexit resulted heralded a "period of prolonged uncertainty".

The agency said the outlook had been reduced from “stable” and said Britain would maintain its AA+ rating three years after its AAA rating was cut.

Moody's said: “The negative effect from lower economic growth will outweigh the fiscal savings from the UK no longer having to contribute to the EU budget.

"The UK government has one of the largest budget deficits among advanced economies, and lower GDP growth will further complicate the implementation of the government's multiyear fiscal consolidation plan."

Leave wins EU referendum - in pictures

1/23

Colin Ellis, chief credit officer at Moody’s, told BBC Radio 4's Today programme the credit rating could impact on UK households.

He said: “The government borrowing rate is normally the benchmark - it is the rate at which other interest rates in the economy are set.

"A lower rating would typically correspond to higher borrowing costs, and that would be felt not just by the government but by businesses and households in the longer term."

Rival ratings agency Standard & Poor's said Britain stood to lose its AAA credit rating before Thursday’s referendum.

Britain’s decision to leave the EU sparked financial turmoil on Friday as £100 billion was wiped off the FTSE 100 – Britain’s most valuable companies - before markets rallied in the afternoon.

When the markets closed at the end of trading, more than £50 billion was cleared from the index.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in