Credit agency Standard & Poor had downgraded the UK’s credit rating from AAA to a AA following the Brexit vote on 23 June. Fitch also lowered the UK’s rating from AA+ to ‘AA’ following the S&P’s demotion. The fear, according to Fitch, is that the vote to exit the European Union could prompt an “abrupt slowdown” as businesses limit their investments on fears of the UK’s stability.
Despite chancellor George Osborne’s attempts to subdue the concerns of businesses have been blunted by the collapse of Sterling to 30-year lows and a resulting devalution of UK businesses by an estimated GBP 40bn. Banks, house builders and airlines have been hit the hardest. The downgrades will result in it making more expensive for the government to borrow.
