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EU needs to avoid domino effect, will try to press UK

Staff Writer |
A disorderly Brexit as a result of Britain misjudging the "self-preservation" instincts of the European Union could lead to a further downgrade of the UK's sovereign credit rating, S&P Global said.

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The UK risks further adverse economic, financial, and ratings outcomes if it ignores the EU's rationale of self-preservation," S&P's top sovereign analyst Moritz Kraemer said in a report.

He was referring to the EU needing to avoid a domino effect of other countries wanting to leave the bloc if they perceived Britain received a "lenient" post-Brexit trade deal.

S&P cut Britain's previously triple-A rating by two-notches to AA with a negative outlook, after the mid-2016 Brexit vote.

"The UK government at the time misread the electorate's mood when it invited it to vote on EU membership. It is hopefully not also misjudging central convictions held across the Channel."

"Otherwise, a disorderly Brexit could become increasingly likely. Such a turn of events would bring renewed downward pressure to Britain's sovereign rating," Kraemer added.

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