Two rating agencies downgrade UK
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E-mail Xinhua, June 28, 2016
Two rating agencies on Monday downgraded their ratings for the UK government debt.
Standard & Poor's (S&P) had rated the UK at its highest rating of AAA, but on Monday afternoon after financial markets had closed it downgraded the rating by two notches to AA.
The FTSE 100 of the London stock exchange tumbled by more 156 points on Monday following a fall of 199 points on Friday, the first day after Britons voted to leave the EU in a referendum.
Only a few hours later a second rating agency, Fitch, downgraded the UK from AA+ to AA.
S&P said in a statement that Friday's Brexit referendum result was a "seminal event", which would "lead to a less predictable, stable, and effective policy framework in the UK".
S&P also noted: "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."
Fitch said in a statement that the Brexit referendum result would "have a negative impact on the UK economy, public finances and political continuity".
Fitch said that it believed that uncertainty after the referendum would lead to a quick slowdown in short-term GDP growth, as businesses defer investment and consider changes to the legal and regulatory environment.
Fitch said the extent of the negative shock that it expected was "uncertain" and revised down its UK GDP growth forecast to 1.6 percent this year from 1.9 percent and from 2 percent for each of 2017 and 2018 to 0.9 percent.
The third major rating agency, Moody's, had already downgraded its rating on UK government debt on Friday, from Aa1 with a stable rating to Aa1 with a negative rating.
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