The UK's gold standard credit rating is set to be slashed following the decision to leave the European Union, leading ratings agencies warned today.
All three of the leading ratings agencies - Standard and Poor's (S&P), Moody's and Fitch, said the UK's AAA rating on its sovereign debt was likely to be cut. In theory, that would push up the costs of government borrowing and make servicing the UK's mountain of public debt more expensive.
Moody's said the result of the vote, where 52 per cent of UK voters opted to leave the EU, "heralds a prolonged period of policy uncertainty that will weigh on the UK's economic and financial performance".
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In understated jargon, Moody's added the vote was "credit negative" for the UK - a sign they are eyeing up stripping the UK of its top-notch score.
Fitch said: "Brexit will be moderately credit negative ... we will review the sovereign rating shortly.
"The Leave result in the referendum ... is credit negative for most sectors in the UK, due to weaker medium-term growth and investment prospects and uncertainty about future trade arrangements," the ratings agency said.
Despite the warnings, the flee to safe havens in the financial markets pushed the yields on UK debt to its lowest ever level - 1.02 per cent on 10-year bonds at one point over night. By mid-morning they had stabilised at 1.07 per cent - well off yesterday's level of 1.37 per cent.