S&P Expects UK to Vote to Stay in EU by Small Majority; Warns About Brexit

May 2, 2016

Ratings agency Standard & Poor’s said on Friday it expected Britons to vote to remain in the European Union by a small majority in a June 23 referendum, but that the risk of leaving was a negative for the country’s creditworthiness.

S&P is the only major ratings agency to maintain a triple-A rating for Britain, but it has a negative outlook, implying a one-in-three chance of a downgrade in the next two years.

“The negative outlook continues to reflect our view that the forthcoming referendum on the U.K.’s membership of the EU … is likely to be a close call and could result in a vote to leave,” S&P said.

“Our affirmation of the rating reflects our assumption that, by a small majority, the referendum will deliver a vote to remain in the EU.”

It added: “A vote to leave is likely to hurt confidence, investment, and GDP growth, and is likely to have a negative effect on public finances. As a consequence … ‘Brexit’ would likely lead us to lower the long-term sovereign credit rating.”

S&P and rival ratings agency Fitch gave similar warnings in December.

(Reporting by David Milliken; editing by Stephen Addison)

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