The prospect of Britain leaving the European Union could cause more damage to the country’s credit rating than uncertainty over the outcome of May’s General Election, Moody’s warned yesterday.
The ratings agency said a potential period of uncertainty if neither the Conservatives nor Labour wins an overall majority on 7 May was unlikely to affect the country’s credit profile.
However, it warned that an exit from the European Union – or a Brexit – could put pressure on its rating and force Moody’s to re-analyse its growth prospects.
“As the EU accounts for around 50 per cent of the UK’s goods and 36 per cent of its services exports, a withdrawal from the EU could have negative implications for trade and investment, both ahead of the event and following it,” the agency said.
David Cameron has pledged to call a referendum on Britain’s membership of the EU by 2017 if the Conservatives form a government after the election, as well as promising to renegotiate the terms of the UK’s membership.
Moody’s warned that failing to renegotiate similar trade terms could damage its growth prospects and in turn its credit rating.
UK firms are also poised to start including formal warnings over uncertainties related to an exit.
Sky News reported last night that dozens of companies are in talks with lawyers over including such warnings in their corporate announcements.