Standard & Poor's: Brexit could "significantly dent" UK financial services and insurance sectors

Emma Haslett
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A Brexit could cause serious damage to financial services, unless the government can make trade agreements to counter it (Source: Getty)

Any departure from the European Union could do significant harm to the UK's insurance and financial services sectors, ratings agency Standard & Poor's has suggested.

Read more: Eurosceptic report sets the stage for Brexit

In a report published today, the organisation pointed out that between them, the two sectors account for 30 per cent of the UK's foreign direct investment, equivalent to 17 per cent of GDP. Half of that comes directly from EU investors.

Thus. S&P credit analyst Frank Gill said leaving the EU "could significantly dent the UK's current net trade surplus in insurance and financial services of more than 3 per cent of GDP".

He said the onus is now on the UK's government to limit the damage.

"The impact of a Brexit on the U.K. financial services industry would depend to a great degree on what trade agreements the U.K. government could make to replace EU membership.
"Given that the UK operates the second-largest current account deficit in the world, to put at risk one of the few net exporting sectors via a highly politically charged referendum would in our view pose substantial risks to the balance of payments, the currency, and the economy."

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