Moody’s slightly less confidence in the future of the UK. The rating agency revised to negative from stable the outlook for the rating of the United Kingdom after the victory of Brexit, meaning it could lower the rating in the near future.
Moody’s believes that s primer “a prolonged period of uncertainty” that will have “negative implications for the medium-term growth prospects” of the British economy. The debt rating was maintained at Aa1. “During the few years that the UK will have to renegotiate its trade relations with the European Union, Moody’s expects a resurgence of uncertainty, decreased confidence and lower investments lead to more growth low, “the agency said in a statement.
It also fears that the country’s public finances weaken more than expected. “The negative impact of lower growth will exceed the savings that the UK will no longer contribute to the EU budget,” says Moody’s.
The EU, the partner shopping UK
the agency recalled that the EU is the largest trading partner of the United Kingdom, absorbing 44% of exports and 48% of foreign direct investment to the UK come as the EU. “It is possible that the UK is able to redirect its trade to other regions and thus compensates for a weaker trade with Europe, but it will take time,” warns the agency.
however, it believes that the country should reach agreement with the European Union to preserve “most, but not all trade”.
“There are clearly downside risks” Moody’s concludes, adding that “in the absence of a trade agreement that preserves the core of the current access to the UK in the single market (…) the growth of its gross domestic product will be materially lower.”
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