Brexit could spell the end of a relatively benign period for the UK and Europe's biggest companies, according to Standard and Poor's (S&P).
In a new report, the ratings agency warned: "The UK's decision to leave the EU is likely to knock the European corporate sector out of the 'sweet spot' it has been enjoying". The body cited "political volatility, prolonged exit negotiations, weaker economic growth, and diminished investment intentions" as big barriers firms across the UK and the other 27 EU countries would have to face.
S&P almost immediately slashed the UK's AAA credit rating after it voted to leave the EU and has taken a dim view of the new government abandoning its commitment to balance the books by the end of the decade. Fellow ratings agency Moody's also chopped its outlook on eight banks and building societies and warned of "reduced profitability" in the UK financial sector due to the referendum.
"Irrespective of whether the UK's decision to leave the EU will prove a success in the long run, the short-term reality is that Europe's relatively benign position in the credit cycle is under threat," said Gareth Williams, an analyst at S&P.
Early indications of Theresa May's priorities in government could also weigh on the debt ratings of major UK companies, as she eyes up more infrastructure spending, a more active industrial policy and interference with corporate governance and foreign takeovers.