Fallout from the UK vote to leave the European Union has already begun only days after the vote was taken. Standard & Poor’s has cut the UK credit rating two notches from AAA to AA with a negative outlook. The ratings agency, now known as S&P Global Ratings, said the UK will lose the advantage of EU membership when it comes to attracting capital and skilled labour. Not being part of the EU would also deter investment, decrease demand for sterling and put the country’s financial services sector at a disadvantage.
S&P is the last of the three rating agencies to remove the UK’s AAA rating. Both Moody’s and Fitch downgraded the UK’s rating in 2013; Moody’s dropped the rating to Aa1 while Fitch moved to AA+. Moody’s has also just announced the UK is now on negative credit watch negative and Fitch has also cut the UK ‘s rating one notch farther to AA (negative outlook).
The European Union has also had its credit rating cut from AA+ to AA by S&P.