London: Ratings agency Standard & Poor’s stripped Britain of its last remaining top-notch credit rating yesterday, slashing it by two notches from AAA and warning more downgrades could follow after Britons voted to leave the European Union last week.
S&P’s move was a fresh blow to Britain’s economic standing after the referendum. Sterling tanked to a 31-year low against the dollar yesterday and the country’s stock markets plunged.
S&P said it was the first time it had chopped an AAA-rated sovereign credit rating by two notches in one go.
“In our opinion, this (referendum) outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the UK,” S&P said in a statement.
The vote has plunged the country into political turmoil, with the ruling Conservative Party looking for a new leader after Prime Minister David Cameron said he would stay on only until October.
The added prospect of a new independence referendum in Scotland – which voted strongly to stay in the EU – threatens the constitutional and economic integrity of the UK, S&P warned.
Long-dated US Treasury yields fell to session lows after the ratings agency’s decision. British 10-year government borrowing costs had already fallen below one per cent for the first time during European trading hours.
S&P warned financial firms – especially foreign ones – might look to other destinations for investment after Britain leaves the EU.
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