The rating agency Moody’s has downgraded the UK’s creditworthiness because of Brexit. Moody’s said on Friday that the rating would be lowered from Aa2 by one notch to Aa3. Since the UK’s last downgrade in September 2017, “Great Britain’s economic strength has declined”.
“The growth is significantly weaker than expected and it should stay that way in the future,” said Moody’s. This is “made worse by the decision to leave the EU and the UK’s subsequent inability to enter into a trade deal with the EU.”
At the same time, Moody’s changed its outlook from negative to stable. This means that the agency does not expect any further credit rating downgrades in the medium term. The Moody’s ratings between Aa1 and Aa3 correspond to a “very low credit risk”. The best rating Aaa means “minimal” credit risk.
Great Britain left the EU on February 1st. Until the end of the year, the country will remain in the EU internal market and the customs union. Both sides actually wanted to use this transition phase to reach a trade agreement. The talks have hardly made any progress for months.