UK Stripped Of Top Credit Rating After Brexit

Ratings agency Standard (Other OTC: SNDH - news) and Poor's has stripped the UK of its top AAA credit rating after the vote to leave the European Union.

"In our opinion, this outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the UK," a statement from the agency read.

The loss of the last remaining "AAA" rating represents a fresh blow to Britain's economic standing after the referendum.

It came after Sterling fell to a 31-year low against the dollar and the country's stock markets plunged.

"The negative outlook reflects the risk to economic prospects, fiscal and external performance, and the role of sterling as a reserve currency, as well as risks to the constitutional and economic integrity of the UK if there is another referendum on Scottish independence," S&P said.

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Sky (LSE: BSY.L - news) 's economics editor Ed Conway said: "Essentially the credit rating is seen as a benchmark for just how creditworthy you are.

"George Osborne ... always talked about how the credit rating was this ultimate benchmark of how well a country was regarded by creditors overseas, and he was very keen to keep that credit rating.

"So the fact that it has been cut, and cut very abruptly ... it's relatively unusual to have such a quick action from a ratings agency - that is big news and I think that will disturb investors."

Rival ratings agencies Fitch and Moody's stripped Britain of their AAA ratings long before the referendum campaign began.

But later on Monday, Fitch further reduced its rating from AA (Other OTC: AATDF - news) + to AA.

"Fitch believes that uncertainty following the referendum outcome will induce an abrupt slowdown in short-term GDP growth, as businesses defer investment and consider changes to the legal and regulatory environment," it said in a statement.

"Medium-term growth will also likely be weaker due to less favourable terms for exports to the EU, lower immigration and a reduction in foreign direct investment. An adjustment in the value of sterling and changes in the business environment could also affect growth."

Protecting Britain's credit rating was a top priority of Chancellor George Osborne when he came to power in 2010.

Earlier on Monday, he had stressed the economy was "fundamentally strong" and "open for business" , despite sterling plunging to a 30-year low against the dollar.

"You should not underestimate our resolve. We were prepared for the unexpected. We are equipped for whatever happens," he said in his first public appearance since the vote.

S&P had been the only major ratings agency to maintain a triple-A rating for Britain.