S&P Global Ratings has confirmed it has lowered the UK’s sovereign credit rating by two notches from AAA to AA as a result of the vote to leave the European Union.
The ratings agency’s decision, followed a similar move by rival Fitch which cut the rating from AA+ to AA, saying that the UK is at risk from an “abrupt slowdown” in growth.
In S&P’s assessment, there are risks of a “marked deterioration of external financing conditions in light of the UK’s extremely elevated level of gross external financing requirements.”
It added that the vote to remain in Scotland and Northern Ireland has created “wider constitutional issues for the country as a whole.”
In the S&P announcement, the agency said that the outlook for the UK was “negative” and the ratings body said that further downgrades were likely.
It said: “The downgrade reflects our view that the leave result in the UK’s referendum on the country’s EU membership will weaken the predictability, stability and effectiveness of policymaking in the UK and affects its economy, GDP growth and fiscal and external balances.
“The downgrade also reflects what we consider enhanced risks of a marked deterioration of external financing conditions in light of the UK’s extremely elevated level of gross external financing requirements as a share of current account receipts and usable reserves.”