S&P downgrades UK’s credit rating by two notches after Brexit

Ratings agency Standard & Poor's hit Britain with a two-notch downgrade to its credit rating on Monday and warned it could cut it further after Britons voted to leave the European Union last week.

“The negative outlook reflects the risk to economic prospects, fiscal and external performance, and the role of sterling as a reserve currency, as well as risks to the constitutional and economic integrity of the UK if there is another referendum on Scottish independence,” S&P said.

S&P had been the only major ratings agency to maintain a triple-A rating for Britain.

"In our opinion, this 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, adding it saw a higher risk of Scotland breaking away from the United Kingdom.

S&P had warned that Britain’s coveted top-notch credit rating was no longer tenable after last Thursday’s referendum result. The loss of the last remaining “AAA” rating represents a fresh blow to Britain’

s economic standing after the referendum, with sterling tanking to a 31-year low against the dollar and the country’s stock markets plunging. Rival ratings agencies Fitch and Moody’s stripped Britain of their AAA ratings long before the referendum campaign began. They too have warned of further cuts to their gradings of Britain’s creditworthiness. Protecting Britain’s credit rating was a top priority of Conservative finance minister George Osborne when he came to power in 2010.

- (Reuters)