The European Union's credit rating will be damaged if Britain refuses to pay a Brexit divorce bill, one of the World's biggest ratings agencies has warned.
Standard & Poor’s said the European Union's AA credit rating "could come under pressure" if the UK refuses to meet its "financial obligations".
The European Union is demanding the UK pay a bill in the region of £50billion as it leaves the bloc to cover the cost of outstanding pension contributions and financial liabilities.
However, while the Government has said it will meet its obligations it has warned Britain will pay “nothing like’’ the amount demanded by the EU.
The analysis from S&P is likely to boost the Government’s negotiating position as it highlights the potential danger faced by the EU of pursuing a hard Brexit.
Cabinet ministers are examining plans that could see Britain get money back from the European Union instead of paying to leave.
John Redwood, a eurosceptic Tory MP, told The Telegraph the UK will not have to pay a Brexit bill.
“We don’t owe them anything,” he said. “I assume we won’t be paying one.
“I don’t think it is a negotiation. There is no legal obligation or legal basis to allow the UK ministers to pay them any money.”
He added: “We have to pay our normal contributions up to the date of leaving but there is no provision for any other kind of capital requirement.”
Mr Redwood said the EU is operating in a “parallel universe” if it believes the UK will pay any kind of Brexit bill.
The S&P warning comes after an influential Lords' committee concluded that the Government is not legally obliged to pay Brussels anything.
A Government source said: "This is being presented in a binary way as a divorce bill, in which we owe them. It's not like that.
"It's more like leaving a gym or a club. You don't continue to pay for other people to use the facilities after you leave".