the rating agency explained its decision Thursday, June 30, by the uncertainties on the cohesion of the European Union after the vote Brexit the UK.
ZOOM Standard & amp; Poor’s downgraded the EU / SCOTT OLSON / AFP
► Why Does EU rating was downgraded?
the rating agency Standard and Poor’s (S & amp; P) downgraded Thursday, June 30 by one notch the rating of long-term debt of the European Union (EU). It explained its decision by the uncertainties surrounding the block after the UK vote in favor of EU output. After the result, “we reassessed our analysis on cohesion within the EU, we now think of as a neutral factor – rather than positive – the notation” the Union, the agency said in a statement
However, S & amp. P does not indicate that a further deterioration will be necessary. The notes issued by the rating agencies, measures the ability of an entity (a state or company for example) to repay its debt. These notes are used by investors to determine at what rate they are willing to lend money to a debt issuer. The higher the score is, the more the interest rate will be low, and vice versa.
The European Union has had to borrow in the past, to help Greece in particular. Note EU as a whole is viewed in these occasions by investors. relatively high The note “means that we believe that the Member States will fulfill” their budgetary obligations to the EU, the agency said. In 2016, Germany, France and England have contributed 21%, 16% and 13% in total of the European budget organization. The departure of the United Kingdom raises the question of loss to the EU budget.
More broadly, the Brexit casts uncertainty over the economic health of the UK and more broadly, the global economy, as highlighted by the IMF in recent days. An economic slowdown would complicate repayment capacity of the States concerned or the EU since it is the Member States as guarantors for its loans
& gt. Read: recession risk in the UK, warns the IMF
► What happens to the British note
Monday, June 27, the rating agencies Standard and Poor’s? and Fitch announced the degradation of their rating of the United Kingdom, increased respectively from AAA to AA, and AA + to AA. In addition, the two agencies have indicated that they might have to lower the note again in the coming months.
This decision “also refers to the risk of deterioration of the access conditions the market “ financial UK, says Standard and Poor’s, and ” constitutional issues “ that will arise, while Scotland, pro-European, considering organizing a new referendum on independence. Moody’s, another agency, had lowered its outlook on UK debt increased to “negative” , preliminary to a new potential lowering.
Meanwhile, the British Minister for finance, George Osborne, said Friday 1 st July that he is likely to abandon one of its major consolidation objectives of public finances due to Brexit and it was no longer safe of a budget surplus by 2020. “We must continue to be firm on the deficit (budget) but we must be realistic about being able to achieve a surplus by the end of the decade” , said the Chancellor of the Exchequer in a speech in Manchester
& gt. Read: A British budget very Policy
► What can happen now
The sequence is now mainly political, as illustrated by the difficulty? find a successor to David Cameron at the British prime minister post. The authorities do not want to rush to ask for EU output. This uncertainty will not play for the British economy.
“This policy file that will be interesting to follow as it has implications for the functioning of the EU and it should not the English folder permanently paralyzed its operation. This will then result in additional pressure outputs in other EU countries and this is not desirable “, decrypts Philippe Waechter at Natixis Asset Management. This provides for “volatility because of the uncertainties that remain, particularly in the banking sector, but no break in the markets.”
& gt; See our special report on Brexit
Cross
No comments:
Post a Comment