Moody’s Investors Service announced change in Outlook for Britain to negative from stable – long-term Issuer rating and debt obligations. Both rating affirmed at Aa1.
Moody’s explains its decision by a referendum, where a majority of Britons, it was decided in favor of withdrawal from the European Union (EU).
For several years the UK will have to revise their trade relations with the EU, and Moody’s expects that increased uncertainty, reduced confidence would reduce potrebrashody and investment, leading to weak growth.
In the longer term, if the UK will not be able to provide a favorable alternative mechanism for trade with the EU and other countries, the growth prospects of the UK will be significantly weaker than expected at present, says Moody’s.
The Agency expects that real GDP growth will be about 0.5 percentage points lower in 2016 and about 1 percentage point lower in 2017 compared to previous forecasts Moody’s, when the growth of the UK economy was estimated at 1.8% and 2.1% respectively.
The rating could be downgraded if the negotiations will be delayed and the UK government will not enter into 1-3 year trade agreement with the EU, which will protect the main elements of the current UK access to the single EU market.
