S&P Global: Brexit turmoil won't automatically push UK rating down
The US-based rating agency - S&P’s lead global sovereign analyst Roberto Sifon-Arevalo told Reuters on Wednesday that the UK’s AA credit rating would not be affected by the leadership change, but a hard Brexit could have a major impact on its credit rating.
Key Quotes (via Reuters):
“A change of leadership would be an important development for us to take into account but I wouldn’t necessarily characterize it as an automatic rating action.”
“We would need to analyze what it actually means for future policymaking: who is coming after and what are the policies.”
S&P’s big worry for the UK rating remains a drastic move away from the EU with a so-called ‘hard Brexit’. Its economists have done a set of economic forecasts on that scenario.
“That showed an important hit to the economy that is likely to have an impact on the rating.”
“Taking away the uncertainty of Brexit from the equation has to be positive (for the rating).”
“But given the degree of support that Brexit had, it would be important to see what the social reaction is to it.”
“Like in France, you do have a super-charged environment where people are willing to go and protest on the streets which puts a lot of restrictions on policymakers.”