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Abu Dhabi, UAESunday 24 June 2018

Disorderly Brexit poses risk to the UK's credit rating, agencies say

Standard & Poor’s Global Ratings and Fitch both say they are keeping existing ‘negative outlook’

The sun sets behind a construction crane in central London, with the skyline of the British capital in the background. Britain’s credit ratings are still at risk from Brexit, Standard & Poor’s Global Ratings and Fitch said, keeping existing ‘negative outlook’ warnings in place in their latest assessments of the country’s creditworthiness. Daniel Sorabji / AFP 
The sun sets behind a construction crane in central London, with the skyline of the British capital in the background. Britain’s credit ratings are still at risk from Brexit, Standard & Poor’s Global Ratings and Fitch said, keeping existing ‘negative outlook’ warnings in place in their latest assessments of the country’s creditworthiness. Daniel Sorabji / AFP 

Britain’s credit ratings are still at risk from Brexit, Standard & Poor’s Global Ratings and Fitch both said, keeping existing "negative outlook" warnings in place in their latest assessments of the country’s creditworthiness.

Britain’s economy held up better than most forecasters expected at the time of the June 2016 Brexit vote to leave the European Union, although figures published on Friday showed it began 2018 on a weak footing, due in part to heavy snowfalls.

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Nevertheless, Brexit dominated the rating agencies’ assessments, with S&P leaving its AA rating for Britain unchanged but warning that uncertainty over its future relationship with the EU persisted.

“We could lower the ratings if we view the risk of a disorderly Brexit as increasingly certain,” S&P said.

“We could revise the outlook to stable if negotiations with the EU move with greater certainty for the UK, and if key sectors retain access to European markets without penalising tariffs.”

S&P stripped Britain of its top-notch AAA rating shortly after the 2016 referendum decision.

Britain has negotiated a transition agreement with the European Union which means little will change for companies immediately after Brexit. It has also begun negotiating the terms of the future trading relations that will come into force after December 2020.

Fitch said its negative outlook reflected “continued, albeit reduced, downside risks of an acrimonious and disruptive exit from EU”. The agency also rates Britain at AA.

Earlier this week, official data showed Britain recorded its smallest budget deficit, as a share of economic output, in 16 years in the 2017/18 financial year.