Moody’s lowered the credit rating outlook of Britain due Brexit – RIA Novosti

21:09 25.06.2016

(updated: 21:15 25.06.2016 )

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LONDON, June 25 -. RIA Novosti, Natalia Kopylova The international rating agency Moody’s first rating agency lowered the forecast of credit rating of Great Britain because of the country’s exit from the EU, but may increase it in the case of the conclusion of new trade agreements with the EU, it should be from the agency posts.

outlook from “stable” to “negative” rating lowered long-term issuer and debt ratings. At the same time, both affirmed at “Aa1″.

As explained in the agency report, the reason for the reduction of the forecast provided by the results of the referendum on Brexit, which mean for the UK economy a long period of uncertainty with a negative realization of the medium-term outlook for economic growth .

“for several years, during which time the UK will have to review their trade relations with the EU, Moody ‘s expects that the increased uncertainty, reduced confidence, reduction of costs and investments will lead to weaker growth in the longer term, if the UK can not provide a favorable alternative mechanism for trade with the EU and other countries, the prospects for growth will be significantly weaker than expected at the moment. “- said the agency

According to the forecast Moody’s, the UK’s real GDP will be 0.5% lower than in 2016, and in 2017 – 1% lower than previously forecast. Previously, the agency expected the UK GDP in 2016 will be 1.8%, in 2017 – 2,1%

In the medium term, economic growth will depend on what kind of trade relations with Britain will sign the EU and on trade policy. British government. Currently, the EU is the largest trading partner of the UK, 44% of exports go to the countries of the European unit and 48% of foreign direct investment comes from the EU.

In the baseline scenario, Moody’s, Britain and the EU will conclude trade agreements, retaining many, but not all currently existing trade relationships.

Another reason that prompted the agency to lower its outlook on, that as a result of the referendum results raise the risk of reducing the predictability and effectiveness of policies

also, the agency believes that Brexit negative impact on the British government’s ability to implement fiscal policy in particular -. before the planned multi-year programs. This will lead to lower revenues and higher costs.

According to the pessimistic scenario agency, reducing the UK budget deficit may be paralyzed and the public debt will rise from current levels.

The experts Moody ‘s believes it is unlikely that the negative effects of the economic slowdown will be fully offset by savings of budgetary funds, which will no longer be sent to the EU budget.

The agency warned that Britain’s credit ratings could be lowered if the negotiations on new agreements with the EU are tight, and if the British authorities will not progress in reducing the budget deficit. Under the pressure will be the national currency and interest rates.

At the same time, Moody’s report notes that the ratings outlook could be upgraded if the UK government will be able to conclude a trade agreement with the EU, preserving the basic elements of Britain’s current access to the single European market.