Ratings agency says it may make a decision on UK credit rating before Brexit is finished

 
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One of the world’s most influential credit rating agencies may not wait for Brexit to be completed to move its judgement on the UK, according to reports.

The chief rating officer at S&P Global, one of the “Big Three” global agencies, said "No, we don't have to wait", when asked if the rating could move before the details of a Brexit deal are known, according to Reuters.

S&P Global currently rates UK government debt at 'AA/A-1+’, with a negative outlook reflecting a higher likelihood of it falling than rising.

Read more: Ratings agencies warn UK election result is credit negative

S&P Global's Moritz Kraemer said: "We will review the UK every six months... and if necessary more often.

“We will be watching the economic implications, the implications for the public finances, the constitutional implications like the whole Scotland situation...and things like the currency and if it will maintain its reserve status."

The firm downgraded the UK from its prized AAA rating last June after the referendum result, saying Brexit could cause “a deterioration of the UK's economic performance, including its large financial services sector”.

In May the agency wrote the “UK economy has more to lose from Brexit than the EU economy”, in large part because of the City of London’s outsized importance for the UK economy.

Read more: S&P Global: "Real opportunity" for UK firms to build outside EU post-Brexit

The City’s financial services are not covered by the World Trade Organisation (WTO) framework, meaning the failure to reach a deal on Brexit could potentially harm parts of London’s economy.

A cut to the UK credit rating could potentially have negative effects for government, with investors likely demanding a higher premium to buy British gilts. A lower credit rating notionally represents a higher risk of the government defaulting on its debt, although in practice this is unlikely barring a major crisis.

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