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S&P Global: Brexit turmoil won’t automatically push UK rating down

The US-based rating agency – S&P’s lead global sovereign analyst Roberto Sifon-Arevalo told Reuters on Wednesday that the UK’s AA credit rating would not be affected by the leadership change, but a hard Brexit could have a major impact on its credit rating.

Key Quotes (via Reuters):

“A change of leadership would be an important development for us to take into account but I wouldn’t necessarily characterize it as an automatic rating action.”  

 “We would need to analyze what it actually means for future policymaking: who is coming after and what are the policies.”

S&P’s big worry for the UK rating remains a drastic move away from the EU with a so-called ‘hard Brexit’. Its economists have done a set of economic forecasts on that scenario.

“That showed an important hit to the economy that is likely to have an impact on the rating.”  

“Taking away the uncertainty of Brexit from the equation has to be positive (for the rating).”

“But given the degree of support that Brexit had, it would be important to see what the social reaction is to it.”

“Like in France, you do have a super-charged environment where people are willing to go and protest on the streets which puts a lot of restrictions on policymakers.”

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