S&P retains negative outlook rating for UK over Brexit

 

Credit ratings agency Standard & Poor's on Friday retained its AA (Frankfurt: A116XA - news) status with negative outlook for the United Kingdom, citing "significant risk" due to Brexit.

The agency also noted risk to London's dominant financial sector, "which is a major contributor to employment and public receipts".

It said Brexit will continue "to create challenging political and constitutional issues... especially if it results in a second referendum on Scottish independence or increases tensions around Northern Ireland".

The vote to leave the European Union also led to a less predictable and less stable institutional and policy framework, "highlighted by the snap election called for June", a statement said.

Prime Minister Theresa May took the country by surprise last week by calling for a general election to be held on June 8, hoping to increase her Conservative Party's slim parliamentary majority.

She (Munich: SOQ.MU - news) is seeking to shore up her mandate ahead of two years of gruelling negotiations over the country's divorce from the EU.

S&P said that although a stronger majority would give May more legitimacy and space to strike a "viable deal with the EU", there are still risks surrounding "both the election and the Brexit negotiations".