'No deal' Brexit could hit UK credit rating, says S&P Global

FILE PHOTO: A woman reacts at Covent Garden's Apple Market, amid the coronavirus disease (COVID-19) outbreak, in London, Britain December 5, 2020. REUTERS/Simon Dawson

LONDON (Reuters) - Credit ratings firm S&P Global said on Monday a ‘no deal’ Brexit that cut Britain off from key European markets for a prolonged period of time could leave the country facing another sovereign rating downgrade.

Britain become the first AAA-rated country to suffer a double-notch downgrade after its 2016 Brexit vote. S&P currently rates it AA with a ‘stable’ outlook, meaning a downgrade is not an immediate risk, but a hard Brexit would reapply pressure.

“Our sovereign ratings on the U.K. could come under downward pressure if the economic recovery is significantly weaker than we anticipate, making fiscal consolidation more challenging,” S&P’s analysts Aarti Sakhuja and Frank Gill said in a note.

“This could happen, for instance, if merchandise and services exports from the UK lose access to key European markets for a prolonged period.”

They did not define what a prolonged period entailed, but added that the economic and political consequences of not reaching a deal were expected to encourage both sides to find common ground.

Reporting by Marc Jones; Editing by Andrew Heavens